<PAGE>
[Logo - American Funds/(R)/] The right choice for the long term/(R)/
Fundamental Investors/SM/
PROSPECTUS
March 1, 2009
TABLE OF CONTENTS
1 Risk/Return summary
5 Fees and expenses of the fund
7 Investment objective, strategies and risks
11 Management and organization
14 Shareholder information
15 Choosing a share class
18 Purchase and exchange of shares
23 Sales charges
26 Sales charge reductions and waivers
29 Rollovers from retirement plans to IRAs
29 Plans of distribution
30 Other compensation to dealers
30 How to sell shares
32 Distributions and taxes
34 Financial highlights
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF
THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
Risk/Return summary
The fund seeks to make your investment grow and provide you with income over
time by investing primarily in common stocks of large, established companies
that offer growth potential at reasonable prices. The fund may also invest
significantly in securities of issuers domiciled outside the United States.
The fund is designed for investors seeking both capital appreciation and income.
Your investment in the fund is subject to risks, including the possibility that
the fund's income and the value of its portfolio holdings may fluctuate in
response to events specific to the companies or markets in which the fund
invests, as well as economic, political or social events in the United States or
abroad.
Although all securities in the fund's portfolio may be adversely affected by
currency fluctuations or global economic, political or social instability,
securities issued by entities based outside the United States may be affected to
a greater extent.
Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.
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Fundamental Investors / Prospectus
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HISTORICAL INVESTMENT RESULTS
The bar chart below shows how the fund's investment results have varied from
year to year, and the Investment Results table on page 4 shows how the fund's
average annual total returns for various periods compare with different broad
measures of market performance. This information provides some indication of the
risks of investing in the fund. All fund results reflect the reinvestment of
dividends and capital gain distributions, if any. Unless otherwise noted, fund
results reflect any fee waivers and/or expense reimbursements in effect during
the period presented. Past results (before and after taxes) are not predictive
of future results.
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if a sales charge were included,
results would be lower.)
[begin bar chart]
1999 24.58%
2000 4.27
2001 -9.55
2002 -17.34
2003 31.96
2004 13.91
2005 11.68
2006 19.24
2007 13.55
2008 -39.70
[end bar chart]
Highest/Lowest quarterly results during this time period were:
HIGHEST 16.28% (quarter ended December 31, 2003)
LOWEST -23.34% (quarter ended December 31, 2008)
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Fundamental Investors / Prospectus
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Unlike the bar chart on the previous page, the Investment Results table on the
following page reflects, as required by Securities and Exchange Commission
rules, the fund's investment results with the following maximum initial or
contingent deferred sales charges imposed:
. Class A share results reflect the maximum initial sales charge of 5.75%. This
charge is reduced for purchases of $25,000 or more and eliminated for
purchases of $1 million or more.
. Class B share results reflect the applicable contingent deferred sales
charge. For example, results for the one-year period shown reflect a
contingent deferred sales charge of 5%. These charges begin to decline one
year after purchase and are eliminated six years after purchase.
. Class C share results for the one-year period shown reflect a contingent
deferred sales charge of 1%, which applies only if shares are sold within one
year of purchase.
. Class 529-E and Class F shares are sold without any initial or contingent
deferred sales charge.
Results would be higher if calculated without sales charges. The references
above to Class A, B, C or F-1 sales charges also apply to the corresponding
Class 529-A, 529-B, 529-C or 529-F-1 sales charges. Unless otherwise noted,
references in this prospectus to Class F shares refer to both Class F-1 and F-2
shares.
The Investment Results table shows the fund's results on both a pretax and
after-tax basis, as required by Securities and Exchange Commission rules.
After-tax returns are shown only for Class A shares; after-tax returns for other
share classes will vary. Total returns shown "after taxes on distributions"
reflect the effect of taxes on distributions (for example, dividends or capital
gain distributions) by the fund. Total returns shown "after taxes on
distributions and sale of fund shares" assume that you sold your fund shares at
the end of the particular time period and, as a result, reflect the effect of
both taxes on distributions by the fund and taxes on any gain or loss realized
upon the sale of the shares. After-tax returns are calculated using the highest
individual federal income tax rates in effect during each year of the periods
shown and do not reflect the impact of state and local taxes.
YOUR ACTUAL AFTER-TAX RETURNS DEPEND ON YOUR INDIVIDUAL TAX SITUATION AND LIKELY
WILL DIFFER FROM THE RESULTS SHOWN BELOW. IN ADDITION, AFTER-TAX RETURNS MAY NOT
BE RELEVANT IF YOU HOLD YOUR FUND SHARES THROUGH A TAX-DEFERRED ARRANGEMENT,
SUCH AS A 401(K) PLAN, INDIVIDUAL RETIREMENT ACCOUNT (IRA) OR 529 COLLEGE
SAVINGS PLAN.
Unlike the Investment Results table on page 4, the Additional Investment Results
table on page 9 reflects the fund's results calculated without sales charges.
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Fundamental Investors / Prospectus
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INVESTMENT RESULTS (WITH MAXIMUM SALES CHARGES)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2008:
1 YEAR 5 YEARS 10 YEARS LIFETIME/1/
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CLASS A -- FROM 8/1/78
Before taxes -43.16% -0.42% 2.30% 11.63%
After taxes on distributions -43.37 -0.96 1.41 N/A
After taxes on distributions and -27.63 -0.13 1.83 N/A
sale of fund shares
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1 YEAR 5 YEARS LIFETIME/1/
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CLASS B -- FIRST SOLD 3/15/00
Before taxes -43.08% -0.35% 0.07%
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CLASS C -- FIRST SOLD 3/15/01
Before taxes -40.75 -0.06 0.40
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CLASS F-1 -- FIRST SOLD 3/15/01
Before taxes -39.69 0.74 1.20
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CLASS 529-A -- FIRST SOLD 2/15/02
Before taxes -43.18 -0.49 1.29
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CLASS 529-B -- FIRST SOLD 2/19/02
Before taxes -43.14 -0.49 1.56
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CLASS 529-C -- FIRST SOLD 2/15/02
Before taxes -40.80 -0.14 1.32
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CLASS 529-E -- FIRST SOLD 3/7/02
Before taxes -39.90 0.38 1.03
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CLASS 529-F-1 -- FIRST SOLD 9/23/02
Before taxes -39.59 0.82 6.09
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1 YEAR 5 YEARS 10 YEARS LIFETIME/2/
-------------------------------------------------------------------------------
INDEXES (BEFORE TAXES)
S&P 500/3/ -36.99% -2.19% -1.38% 10.74%
Lipper Growth & Income -37.54 -2.12 -0.24 10.04
Funds Index/4/
MSCI World Index/5/ -40.33 0.00 -0.19 9.78
Class A annualized 30-day yield at December 31, 2008: 2.04%/6/
(For current yield information, please call American FundsLine/(R)/ at
800/325-3590.)
1 Lifetime results for Class A shares are measured from August 1, 1978, when
Capital Research and Management Company became the fund's investment adviser.
Lifetime results for other share classes are measured from the date the share
class was first sold.
2 Lifetime results for the index(es) shown are measured from the date Capital
Research and Management Company became the fund's investment adviser. The funds
or securities that compose each index may vary over time.
3 Standard & Poor's 500 Composite Index is a market capitalization-weighted
index based on the average weighted performance of 500 widely held common
stocks. This index is unmanaged and its results include reinvested dividends
and/ or distributions, but do not reflect sales charges, commissions, expenses
or taxes.
4 Lipper Growth & Income Funds Index is an equally weighted index of funds that
combine a growth-of-earnings orientation and an income requirement for level
and/or rising dividends. The results of the underlying funds in the index
include the reinvestment of dividends and capital gain distributions, as well
as brokerage commissions paid by the funds for portfolio transactions, but do
not reflect sales charges or taxes.
5 MSCI World Index is a free float-adjusted, market capitalization weighted
index that is designed to measure equity market performance of developed
markets. The index consists of 23 developed country indexes, including the
United States. This index is unmanaged and its results include reinvested
dividends and/or distributions, but do not reflect sales charges, commissions,
expenses or taxes.
6 Reflects a fee waiver (2.02% without the waiver) as described in the Annual
Fund Operating Expenses table under "Fees and expenses of the fund."
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Fundamental Investors / Prospectus
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Fees and expenses of the fund
These tables describe the fees and expenses that you may pay if you buy and hold
shares of the fund.
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A/1/ CLASS B/1/ CLASS C/1/ CLASS 529-E/2/ CLASS F/1,3/
--------------------------------------------------------------------------------------------
Maximum initial sales
charge on purchases 5.75%/4/ none none none none
(as a percentage of
offering price)
--------------------------------------------------------------------------------------------
Maximum sales charge none none none none none
on reinvested
dividends
--------------------------------------------------------------------------------------------
Maximum contingent none/5/ 5.00%/6/ 1.00%/7/ none none
deferred sales charge
--------------------------------------------------------------------------------------------
Redemption or none none none none none
exchange fees
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)/8/
CLASS A CLASS B CLASS C CLASS F-1 CLASS F-2/14/
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Management fees/9/ 0.25% 0.25% 0.25% 0.25% 0.25%
-------------------------------------------------------------------------------
Distribution and/or 0.24 1.00 1.00 0.25 none
service (12b-1)
fees/10/
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Other expenses/11/ 0.14 0.14 0.18 0.12 0.17
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Total annual fund 0.63 1.39 1.43 0.62 0.42
operating expenses/9/
CLASS CLASS CLASS CLASS CLASS
529-A 529-B 529-C 529-E 529-F-1
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Management fees/9/ 0.25% 0.25% 0.25% 0.25% 0.25%
-------------------------------------------------------------------------------
Distribution and/or 0.20 1.00 1.00 0.50 0.00
service (12b-1)
fees/12/
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Other 0.23 0.25 0.24 0.23 0.23
expenses/11,13/
-------------------------------------------------------------------------------
Total annual fund 0.68 1.50 1.49 0.98 0.48
operating expenses/9/
1 Includes corresponding 529 share class. Accounts holding these 529 shares are
subject to a $10 account setup fee and an annual $10 account maintenance fee,
which are not reflected in this table.
2 Available only to employer-sponsored 529 plans. Accounts holding these shares
are subject to a $10 account setup fee and an annual $10 account maintenance
fee, which are not reflected in this table.
3 Class F-1, F-2 and 529-F-1 shares are generally available only to fee-based
programs of investment dealers that have special agreements with the fund's
distributor and to certain registered investment advisers.
4 The initial sales charge is reduced for purchases of $25,000 or more and
eliminated for purchases of $1 million or more.
5 A contingent deferred sales charge of 1.00% applies on certain redemptions
made within one year following purchases of $1 million or more made without an
initial sales charge.
6 The contingent deferred sales charge is reduced one year after purchase and
eliminated six years after purchase.
7 The contingent deferred sales charge is eliminated one year after purchase.
8 Based on amounts incurred in the fund's previous fiscal year, except as
otherwise noted.
9 The fund's investment adviser waived a portion of its management fees from
September 1, 2004, through December 31, 2008. Management fees and total annual
fund operating expenses in the table do not reflect any waiver. Information
regarding the effect of any waiver on total annual fund operating expenses can
be found in the Financial Highlights table in this prospectus and in the fund's
annual report.
10 Class A and F-1 12b-1 fees may not exceed .25% and .50%, respectively, of
each class's average net assets annually. Class B and C 12b-1 fees may not
exceed 1.00% of each class's average net assets annually.
11 Includes custodial, legal, transfer agent and subtransfer agent/recordkeeping
payments and various other expenses. Subtransfer agent/recordkeeping payments
may be made to third parties (including affiliates of the fund's investment
adviser) that provide subtransfer agent, recordkeeping and/or shareholder
services with respect to certain shareholder accounts in lieu of the transfer
agent providing such services. The amount paid for subtransfer
agent/recordkeeping services varies depending on the share class and services
provided, and typically ranges from $3 to $19 per account.
12 Class 529-A and 529-F-1 12b-1 fees may not exceed .50% of each class's
average net assets annually. Class 529-B and 529-C 12b-1 fees may not exceed
1.00% of each class's average net assets annually. Class 529-E 12b-1 fees may
not exceed .75% of the class's average net assets annually.
13 Includes up to a maximum of .10% paid to a state or states for oversight and
administrative services.
14 Based on estimated amounts for the current fiscal year.
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Fundamental Investors / Prospectus
<PAGE>
EXAMPLES
The examples below are intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The examples do not reflect the impact of any fee waivers
or expense reimbursements. The examples assuming redemption do not reflect the
effect of any taxable gain or loss at the time of the redemption.
Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
Class A/1/ $636 $765 $ 906 $1,316
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Class B -- assuming redemption/2/ 642 840 961 1,461
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Class B -- assuming no redemption/3/ 142 440 761 1,461
-------------------------------------------------------------------------------
Class C -- assuming redemption/4/ 246 452 782 1,713
-------------------------------------------------------------------------------
Class C -- assuming no redemption 146 452 782 1,713
-------------------------------------------------------------------------------
Class F-1 -- excluding intermediary 63 199 346 774
fees/5/
-------------------------------------------------------------------------------
Class F-2 -- excluding intermediary 43 135 235 530
fees/5/
-------------------------------------------------------------------------------
Class 529-A/1,6/ 660 819 991 1,478
-------------------------------------------------------------------------------
Class 529-B -- assuming 672 913 1,076 1,670
redemption/2,6/
-------------------------------------------------------------------------------
Class 529-B -- assuming no 172 513 876 1,670
redemption/3,6/
-------------------------------------------------------------------------------
Class 529-C -- assuming 271 510 870 1,879
redemption/4,6/
-------------------------------------------------------------------------------
Class 529-C -- assuming no redemption/6/ 171 510 870 1,879
-------------------------------------------------------------------------------
Class 529-E/6/ 120 351 600 1,305
-------------------------------------------------------------------------------
Class 529-F-1 -- excluding intermediary 69 194 328 710
fees/5,6/
1 Reflects the maximum initial sales charge.
2 Reflects applicable contingent deferred sales charges through year six and
Class A or 529-A expenses for years nine and 10 because Class B and 529-B
shares automatically convert to Class A and 529-A shares, respectively, in the
month of the eight-year anniversary of the purchase date.
3 Reflects Class A or 529-A expenses for years nine and 10 because Class B and
529-B shares automatically convert to Class A and 529-A shares, respectively,
in the month of the eight-year anniversary of the purchase date.
4 Reflects a contingent deferred sales charge in the first year.
5 Does not include fees charged by financial intermediaries, which are
independent of fund expenses and will increase the overall cost of your
investment. Intermediary fees typically range from .75% to 1.50% of assets
annually depending on the services offered.
6 Reflects a $10 account setup fee and an annual $10 account maintenance fee.
6
Fundamental Investors / Prospectus
<PAGE>
Investment objective, strategies and risks
The fund's investment objective is to achieve long-term growth of capital and
income. The fund invests primarily in common stocks or securities convertible
into common stocks and may invest significantly in securities of issuers
domiciled outside the United States and Canada and not included in the Standard
& Poor's 500 Composite Index.
The prices of, and the income generated by, securities held by the fund may
decline in response to certain events, including those directly involving the
companies whose securities are owned by the fund; conditions affecting the
general economy; overall market changes; local, regional or global political,
social or economic instability; and currency, interest rate and commodity price
fluctuations.
Investments in securities issued by entities based outside the United States may
be subject to the risks described above to a greater extent and may also be
affected by currency fluctuations and controls; different accounting, auditing,
financial reporting, and legal standards and practices in some countries;
expropriation; changes in tax policy; greater market volatility; differing
securities market structures; higher transaction costs; and various
administrative difficulties, such as delays in clearing and settling portfolio
transactions or in receiving payment of dividends. These risks may be heightened
in connection with investments in developing countries. Investments in
securities issued by entities domiciled in the United States may also be subject
to many of these risks.
The fund may also hold cash or money market instruments. The percentage of the
fund invested in such holdings varies and depends on various factors, including
market conditions and purchases and redemptions of fund shares. A larger
percentage of such holdings could moderate the fund's investment results in a
period of rising market prices.
A larger percentage of cash or money market instruments could reduce the
magnitude of the fund's loss in a period of falling market prices and provide
liquidity to make additional investments or to meet redemptions.
The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively valued
companies that, in its opinion, represent above-average, long-term investment
opportunities. The investment adviser believes that an important way to
accomplish this is through fundamental analysis, which may include meeting with
company executives and employees, suppliers, customers and competitors.
Securities may be sold when the investment adviser believes that they no longer
represent relatively attractive investment opportunities.
7
Fundamental Investors / Prospectus
<PAGE>
OTHER IMPORTANT INVESTMENT PRACTICES
In addition to the principal investment strategies described above, the fund has
other investment practices that are described in this prospectus and in the
statement of additional information.
The fund may invest to a limited extent in lower quality debt securities rated
Ba1 and BB+ or below or unrated but determined by the investment adviser to be
of equivalent quality. The prices of debt securities fluctuate depending on such
factors as changing interest rates, effective maturities and credit ratings. For
example, their prices generally decline when interest rates rise and vice versa.
Lower quality or longer maturity debt securities generally have higher rates of
interest and may be subject to greater price fluctuations than higher quality or
shorter maturity debt securities.
ADDITIONAL INVESTMENT RESULTS
Unlike the Investment Results table on page 4, the table on page 9 reflects the
fund's results calculated without sales charges.
8
Fundamental Investors / Prospectus
<PAGE>
ADDITIONAL INVESTMENT RESULTS (WITHOUT SALES CHARGES)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2008:
1 YEAR 5 YEARS 10 YEARS LIFETIME/1/
-------------------------------------------------------------------------------
CLASS A -- FROM 8/1/78
Before taxes -39.70% 0.76% 2.90% 11.85%
After taxes on distributions -39.92 0.22 2.01 N/A
After taxes on distributions and -25.35 0.88 2.36 N/A
sale of fund shares
-------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFETIME/1/
---------------------------------------------------------------------
CLASS B -- FIRST SOLD 3/15/00
Before taxes -40.14% 0.00% 0.07%
---------------------------------------------------------------------
CLASS C -- FIRST SOLD 3/15/01
Before taxes -40.16 -0.06 0.40
---------------------------------------------------------------------
CLASS F-1 -- FIRST SOLD 3/15/01
Before taxes -39.69 0.74 1.20
---------------------------------------------------------------------
CLASS 529-A -- FIRST SOLD 2/15/02
Before taxes -39.71 0.69 2.17
---------------------------------------------------------------------
CLASS 529-B -- FIRST SOLD 2/19/02
Before taxes -40.20 -0.14 1.56
---------------------------------------------------------------------
CLASS 529-C -- FIRST SOLD 2/15/02
Before taxes -40.21 -0.14 1.32
---------------------------------------------------------------------
CLASS 529-E -- FIRST SOLD 3/7/02
Before taxes -39.90 0.38 1.03
---------------------------------------------------------------------
CLASS 529-F-1 -- FIRST SOLD 9/23/02
Before taxes -39.59 0.82 6.09
---------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS LIFETIME/2/
-------------------------------------------------------------------------------
INDEXES (BEFORE TAXES)
S&P 500/3/ -36.99% -2.19% -1.38% 10.74%
Lipper Growth & Income -37.54 -2.12 -0.24 10.04
Funds Index/4/
MSCI World Index/5/ -40.33 0.00 -0.19 9.78
Class A distribution rate at December 31, 2008: 2.30%/6/
(For current distribution rate information, please call American FundsLine
at 800/325-3590.)
1 Lifetime results for Class A shares are measured from August 1, 1978, when
Capital Research and Management Company became the fund's investment adviser.
Lifetime results for other share classes are measured from the date the share
class was first sold.
2 Lifetime results for the index(es) shown are measured from the date Capital
Research and Management Company became the fund's investment adviser. The funds
or securities that compose each index may vary over time.
3 Standard & Poor's 500 Composite Index is a market capitalization-weighted
index based on the average weighted performance of 500 widely held common
stocks. This index is unmanaged and its results include reinvested dividends
and/ or distributions, but do not reflect sales charges, commissions, expenses
or taxes.
4 Lipper Growth & Income Funds Index is an equally weighted index of funds that
combine a growth-of-earnings orientation and an income requirement for level
and/or rising dividends. The results of the underlying funds in the index
include the reinvestment of dividends and capital gain distributions, as well
as brokerage commissions paid by the funds for portfolio transactions, but do
not reflect sales charges or taxes.
5 MSCI World Index is a free float-adjusted, market capitalization weighted
index that is designed to measure equity market performance of developed
markets. The index consists of 23 developed country indexes, including the
United States. This index is unmanaged and its results include reinvested
dividends and/or distributions, but do not reflect sales charges, commissions,
expenses or taxes.
6 The distribution rate is based on actual dividends paid to Class A
shareholders over a 12-month period. Capital gain distributions, if any, are
added back to net asset value to determine the rate.
9
Fundamental Investors / Prospectus
<PAGE>
[begin pie chart]
INDUSTRY SECTOR DIVERSIFICATION AS OF DECEMBER 31, 2008 (PERCENT OF NET ASSETS)
Health care 11.87%
Industrials 12.24%
Information technology 17.61%
Energy 10.54%
Financials 7.58%
Other industries 28.19%
Bonds & notes 0.15%
Short-term securities & other assets less liabilities 11.82%
[end pie chart]
PERCENT INVESTED BY COUNTRY AS OF DECEMBER 31, 2008 PERCENT OF NET ASSETS
-------------------------------------------------------------------------------
United States 65.0%
-------------------------------------------------------------------------------
Euro zone* 9.1
-------------------------------------------------------------------------------
Canada 3.9
-------------------------------------------------------------------------------
Japan 1.7
-------------------------------------------------------------------------------
Switzerland 3.4
-------------------------------------------------------------------------------
United Kingdom 2.5
-------------------------------------------------------------------------------
Other countries 2.4
-------------------------------------------------------------------------------
Bonds, short-term securities & other assets less 12.0
liabilities
-------------------------------------------------------------------------------
* Countries using the euro as a common currency; those represented in the fund's
portfolio are Finland, France, Germany, Ireland, Italy and the Netherlands.
Because the fund is actively managed, its holdings will change over time.
For updated information on the fund's portfolio holdings, please visit us at
americanfunds.com.
10
Fundamental Investors / Prospectus
<PAGE>
Management and organization
INVESTMENT ADVISER
Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and other
funds, including the American Funds. Capital Research and Management Company is
a wholly owned subsidiary of The Capital Group Companies, Inc. and is located at
333 South Hope Street, Los Angeles, California 90071, and 6455 Irvine Center
Drive, Irvine, California 92618. Capital Research and Management Company manages
the investment portfolio and business affairs of the fund. The total management
fee paid by the fund, as a percentage of average net assets, for the previous
fiscal year appears in the Annual Fund Operating Expenses table under "Fees and
expenses of the fund." A discussion regarding the basis for the approval of the
fund's investment advisory and service agreement by the fund's board of
directors is contained in the fund's annual report to shareholders for the
fiscal year ended December 31, 2008.
Capital Research and Management Company manages equity assets through two
investment divisions, Capital World Investors and Capital Research Global
Investors, and manages fixed-income assets through its Fixed Income division.
Capital World Investors and Capital Research Global Investors make investment
decisions on an independent basis.
Rather than remain as investment divisions, Capital World Investors and Capital
Research Global Investors may be incorporated into wholly owned subsidiaries of
Capital Research and Management Company. In that event, Capital Research and
Management Company would continue to be the investment adviser, and day-to-day
investment management of equity assets would continue to be carried out through
one or both of these subsidiaries. Capital Research and Management Company and
the funds it advises have applied to the Securities and Exchange Commission for
an exemptive order that would give Capital Research and Management Company the
authority to use, upon approval of the funds' boards, its management
subsidiaries and affiliates to provide day-to-day investment management services
to the funds, including making changes to the management subsidiaries and
affiliates providing such services. Approval by the funds' shareholders would be
required before any authority granted under an exemptive order could be
exercised. There is no assurance that Capital Research and Management Company
will incorporate its investment divisions or seek a shareholder vote to exercise
any authority, if granted, under an exemptive order.
EXECUTION OF PORTFOLIO TRANSACTIONS
The investment adviser places orders with broker-dealers for the fund's
portfolio transactions. In selecting broker-dealers, the investment adviser
strives to obtain "best execution" (the most favorable total price reasonably
attainable under the circumstances) for the fund's
11
Fundamental Investors / Prospectus
<PAGE>
portfolio transactions, taking into account a variety of factors. Subject to
best execution, the investment adviser may consider investment research and/or
brokerage services provided to the adviser in placing orders for the fund's
portfolio transactions. The investment adviser may place orders for the fund's
portfolio transactions with broker-dealers who have sold shares of funds managed
by the investment adviser or its affiliated companies; however, it does not give
consideration to whether a broker-dealer has sold shares of the funds managed by
the investment adviser or its affiliated companies when placing any such orders
for the fund's portfolio transactions. A more detailed description of the
investment adviser's policies is included in the fund's statement of additional
information.
PORTFOLIO HOLDINGS
Portfolio holdings information for the fund is available on the American Funds
website at americanfunds.com. To reach this information, access the fund's
detailed information page on the website. A list of the fund's top 10 equity
holdings, updated as of each month-end, is generally posted to this page within
14 days after the end of the applicable month. A link to the fund's complete
list of publicly disclosed portfolio holdings, updated as of each calendar
quarter-end, is generally posted to this page within 45 days after the end of
the applicable quarter. Both lists remain available on the website until new
information for the next month or quarter is posted. Portfolio holdings
information for the fund is also contained in reports filed with the Securities
and Exchange Commission.
A description of the fund's policies and procedures regarding disclosure of
information about its portfolio holdings is available in the statement of
additional information.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach, the portfolio of
a fund is divided into segments managed by individual counselors who decide how
their respective segments will be invested. In addition, Capital Research and
Management Company's investment analysts may make investment decisions with
respect to a portion of a fund's portfolio. Investment decisions are subject to
a fund's objective(s), policies and restrictions and the oversight of the
appropriate investment-related committees of Capital Research and Management
Company and its investment divisions.
12
Fundamental Investors / Prospectus
<PAGE>
The primary individual portfolio counselors for Fundamental Investors are:
PRIMARY TITLE WITH PORTFOLIO
PORTFOLIO INVESTMENT ADVISER COUNSELOR
PORTFOLIO COUNSELOR/ COUNSELOR (OR AFFILIATE) ROLE IN
FUND TITLE EXPERIENCE AND INVESTMENT MANAGEMENT
(IF APPLICABLE) IN THIS FUND EXPERIENCE OF THE FUND
--------------------------------------------------------------------------------------------------
DINA N. PERRY 16 years Senior Vice President - Serves as an equity
President and Director (plus 1 year of Capital World Investors portfolio counselor
prior experience
as an Investment professional for
investment analyst 31 years in total;
for the fund) 17 years with Capital
Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------
MICHAEL T. KERR 10 years Senior Vice President - Serves as an equity
Senior Vice President (plus 5 years of Capital World Investors portfolio counselor
prior experience
as an Investment professional for
investment analyst 26 years in total;
for the fund) 24 years with Capital
Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------
RONALD B. MORROW 6 years Senior Vice President - Serves as an equity
Vice President (plus 5 years of Capital World Investors portfolio counselor
prior experience
as an Investment professional for
investment analyst 41 years in total;
for the fund) 12 years with Capital
Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------
JAMES E. DRASDO 25 years Senior Vice President - Serves as an equity
(plus 6 years of Capital World Investors portfolio counselor
prior experience
as an Investment professional for
investment analyst 37 years in total;
for the fund) 32 years with Capital
Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------
BRADY L. ENRIGHT 3 years Senior Vice President - Serves as an equity
Capital World Investors portfolio counselor
Investment professional for
17 years in total;
12 years with Capital
Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------
Information regarding the portfolio counselors' compensation, their ownership of
securities in the fund and other accounts they manage can be found in the
statement of additional information.
13
Fundamental Investors / Prospectus
<PAGE>
Shareholder information
SHAREHOLDER SERVICES
American Funds Service Company/(R)/,the fund's transfer agent, offers a wide
range of services that you can use to alter your investment program should your
needs and circumstances change. These services may be terminated or modified at
any time upon 60 days' written notice.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
Call toll-free from anywhere in the United States
(8 a.m. to 8 p.m. ET): 800/421-0180
Access the American Funds website : americanfunds.com
[map of the United States]
INDIANA VIRGINIA
SERVICE CENTER SERVICE CENTER
American Funds American Funds
Service Company Service Company
P.O. Box 6007 P.O. Box 2280
Indianapolis, Indiana Norfolk, Virginia
46206-6007 23501-2280
Fax: 317/735-6636 Fax: 757/670-4761
A MORE DETAILED DESCRIPTION OF POLICIES AND SERVICES IS INCLUDED IN THE FUND'S
STATEMENT OF ADDITIONAL INFORMATION AND THE OWNER'S GUIDE SENT TO NEW AMERICAN
FUNDS SHAREHOLDERS ENTITLED WELCOME. CLASS 529 SHAREHOLDERS SHOULD ALSO REFER TO
THE APPLICABLE PROGRAM DESCRIPTION FOR INFORMATION ON POLICIES AND SERVICES
SPECIFICALLY RELATING TO THEIR ACCOUNT(S). These documents are available by
writing or calling American Funds Service Company. Certain privileges and/or
services described on the following pages of this prospectus and in the
statement of additional information may not be available to you depending on
your investment dealer. Please see your financial adviser or investment dealer
for more information.
14
Fundamental Investors / Prospectus
<PAGE>
Choosing a share class
The fund offers different classes of shares through this prospectus. Class A, B,
C and F shares are available through various investment programs or accounts,
including certain types of retirement plans (see limitations below). The
services or share classes available to you may vary depending upon how you wish
to purchase shares of the fund.
Effective April 21, 2009, Class B and 529-B shares will not be available for
purchase. Any investment received by the fund on or after this date that is
intended for Class B or 529-B shares will instead be invested in Class A or
529-A shares and subject to any applicable sales charges. In addition, if the
fund is advised prior to April 21, 2009, that the financing arrangement that
supports the sale of Class B and 529-B shares has been withdrawn, any investment
in such shares on or after that date will instead be invested in Class A or
529-A shares and subject to any applicable sales charges.
Shareholders with investments in Class B and 529-B shares may continue to hold
such shares until they convert to Class A or 529-A shares. However, no
additional investments will be accepted in Class B or 529-B shares on or after
April 21, 2009, or such other date as described in the previous paragraph.
Dividends and capital gain distributions may continue to be reinvested in Class
B or 529-B shares until their conversion dates. In addition, shareholders
invested in Class B or 529-B shares will be able to exchange those shares into
other funds offering Class B or 529-B shares until they convert.
Investors residing in any state may purchase Class 529 shares through an account
established with a 529 college savings plan managed by the American Funds
organization. Class 529-A, 529-B, 529-C and 529-F-1 shares are structured
similarly to the corresponding Class A, B, C and F-1 shares. For example, the
same initial sales charges apply to Class 529-A shares as to Class A shares.
Class 529-E shares are available only to investors participating through an
eligible employer plan.
Each share class represents an investment in the same portfolio of securities,
but each class has its own sales charge and expense structure, allowing you to
choose the class that best fits your situation. WHEN YOU PURCHASE SHARES OF THE
FUND, YOU SHOULD CHOOSE A SHARE CLASS. IF NONE IS CHOSEN, YOUR INVESTMENT WILL
BE MADE IN CLASS A SHARES OR, IN THE CASE OF A 529 PLAN INVESTMENT, CLASS 529-A
SHARES.
15
Fundamental Investors / Prospectus
<PAGE>
Factors you should consider in choosing a class of shares include:
. how long you expect to own the shares;
. how much you intend to invest;
. total expenses associated with owning shares of each class;
. whether you qualify for any reduction or waiver of sales charges (for
example, Class A or 529-A shares may be a less expensive option over time,
particularly if you qualify for a sales charge reduction or waiver);
. whether you plan to take any distributions in the near future (for example,
the contingent deferred sales charge will not be waived if you sell your Class
529-B or 529-C shares to cover higher education expenses); and
. availability of share classes:
-- Class B and C shares are not available to retirement plans that do not
currently invest in such shares and that are eligible to invest in Class R
shares, including employer-sponsored retirement plans such as defined benefit
plans, 401(k) plans, 457 plans, 403(b) plans, and money purchase pension and
profit-sharing plans; and
-- Class F and 529-F-1 shares are generally available only to fee-based
programs of investment dealers that have special agreements with the fund's
distributor and to certain registered investment advisers.
EACH INVESTOR'S FINANCIAL CONSIDERATIONS ARE DIFFERENT. YOU SHOULD SPEAK WITH
YOUR FINANCIAL ADVISER TO HELP YOU DECIDE WHICH SHARE CLASS IS BEST FOR YOU.
UNLESS OTHERWISE NOTED, REFERENCES IN THE FOLLOWING PAGES TO CLASS A, B, C OR
F-1 SHARES ALSO REFER TO THE CORRESPONDING CLASS 529-A, 529-B, 529-C OR 529-F-1
SHARES.
16
Fundamental Investors / Prospectus
<PAGE>
SUMMARY OF THE PRIMARY DIFFERENCES AMONG SHARE CLASSES
CLASS A SHARES
Initial sales charge up to 5.75% (reduced for purchases of $25,000 or more
and eliminated for purchases of $1 million or more)
Contingent deferred none (except that a charge of 1.00% applies to certain
sales charge redemptions made within one year following purchases
of $1 million or more without an initial sales charge)
12b-1 fees up to .25% annually (for Class 529-A shares, may not
exceed .50% annually)
Dividends generally higher than other classes due to lower
annual expenses, but may be lower than Class F-1
shares, depending on relative expenses, and lower than
Class F-2 shares due to higher 12b-1 fees
Purchase maximum none
Conversion none
CLASS B SHARES
Initial sales charge none
Contingent deferred starts at 5.00%, declining to 0% six years after
sales charge purchase
12b-1 fees up to 1.00% annually
Dividends generally lower than Class A and F shares due to
higher 12b-1 fees and other expenses, but higher than
Class C shares due to lower other expenses
Purchase maximum see the discussion regarding purchase minimums and
maximums in "Purchase and exchange of shares"
Conversion automatic conversion to Class A or 529-A shares in the
month of the eight-year anniversary of the purchase
date, reducing future annual expenses
CLASS C SHARES
Initial sales charge none
Contingent deferred 1.00% if shares are sold within one year after
sales charge purchase
12b-1 fees up to 1.00% annually
Dividends generally lower than other classes due to higher 12b-1
fees and other expenses
Purchase maximum see the discussion regarding purchase minimums and
maximums in "Purchase and exchange of shares"
Conversion automatic conversion to Class F-1 shares in the month
of the 10-year anniversary of the purchase date,
reducing future annual expenses (Class 529-C shares
will not convert to Class 529-F-1 shares)
CLASS 529-E SHARES
Initial sales charge none
Contingent deferred none
sales charge
12b-1 fees currently up to .50% annually (may not exceed .75%
annually)
Dividends generally higher than Class 529-B and 529-C shares due
to lower 12b-1 fees, but lower than Class 529-A and
529-F-1 shares due to higher 12b-1 fees
Purchase maximum none
Conversion none
CLASS F-1 SHARES
Initial sales charge none
Contingent deferred none
sales charge
12b-1 fees currently up to .25% annually (may not exceed .50%
annually)
Dividends generally higher than Class B and C shares due to
lower 12b-1 fees, and may be higher than Class A
shares, depending on relative expenses, and lower than
Class F-2 shares due to higher 12b-1 fees
Purchase maximum none
Conversion none
CLASS F-2 SHARES
Initial sales charge none
Contingent deferred none
sales charge
12b-1 fees none
Dividends generally higher than other classes due to absence of
12b-1 fees
Purchase maximum none
Conversion none
17
Fundamental Investors / Prospectus
<PAGE>
Purchase and exchange of shares
THE FUND'S TRANSFER AGENT, ON BEHALF OF THE FUND AND AMERICAN FUNDS
DISTRIBUTORS,/(R)/ THE FUND'S DISTRIBUTOR, IS REQUIRED BY LAW TO OBTAIN
CERTAIN PERSONAL INFORMATION FROM YOU OR ANY OTHER PERSON(S) ACTING ON YOUR
BEHALF IN ORDER TO VERIFY YOUR OR SUCH PERSON'S IDENTITY. IF YOU DO NOT PROVIDE
THE INFORMATION, THE TRANSFER AGENT MAY NOT BE ABLE TO OPEN YOUR ACCOUNT. IF THE
TRANSFER AGENT IS UNABLE TO VERIFY YOUR IDENTITY OR THAT OF ANY OTHER PERSON(S)
AUTHORIZED TO ACT ON YOUR BEHALF, OR BELIEVES IT HAS IDENTIFIED POTENTIALLY
CRIMINAL ACTIVITY, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO
CLOSE YOUR ACCOUNT OR TAKE SUCH OTHER ACTION THEY DEEM REASONABLE OR REQUIRED BY
LAW.
When purchasing shares, you should designate the fund or funds in which you wish
to invest. If no fund is designated and the amount of your cash investment is
more than $5,000, your money will be held uninvested (without liability to the
transfer agent for loss of income or appreciation pending receipt of proper
instructions) until investment instructions are received, but for no more than
three business days. Your investment will be made at the net asset value (plus
any applicable sales charge in the case of Class A shares) next determined after
investment instructions are received and accepted by the transfer agent. If
investment instructions are not received, your money will be invested in Class A
shares of The Cash Management Trust of America on the third business day after
receipt of your investment.
If no fund is designated and the amount of your cash investment is $5,000 or
less, your money will be invested in the same proportion and in the same fund or
funds in which your last cash investment (excluding exchanges) was made,
provided such investment was made within the last 16 months. If no investment
was made within the last 16 months, your money will be held uninvested (without
liability to the transfer agent for loss of
18
Fundamental Investors / Prospectus
<PAGE>
income or appreciation pending receipt of proper instructions) until investment
instructions are received, but for no more than three business days. Your
investment will be made at the net asset value (plus any applicable sales charge
in the case of Class A shares) next determined after investment instructions are
received and accepted by the transfer agent. If investment instructions are not
received, your money will be invested in Class A shares of The Cash Management
Trust of America on the third business day after receipt of your investment.
PURCHASE OF CLASS A, B AND C SHARES
You may generally open an account and purchase Class A, B and C shares by
contacting any financial adviser (who may impose transaction charges in addition
to those described in this prospectus) authorized to sell the fund's shares. You
may purchase additional shares in various ways, including through your financial
adviser and by mail, telephone, the Internet and bank wire.
PURCHASE OF CLASS F SHARES
You may generally open an account and purchase Class F shares only through
fee-based programs of investment dealers that have special agreements with the
fund's distributor and through certain registered investment advisers. These
dealers and advisers typically charge ongoing fees for services they provide.
PURCHASE OF CLASS 529 SHARES
Class 529 shares may be purchased only through an account established with a 529
college savings plan managed by the American Funds organization. You may open
this type of account and purchase 529 shares by contacting any financial adviser
(who may impose transaction charges in addition to those described in this
prospectus) authorized to sell such an account. You may purchase additional
shares in various ways, including through your financial adviser and by mail,
telephone, the Internet and bank wire.
Class 529-E shares may be purchased only by employees participating through an
eligible employer plan.
EXCHANGE
Generally, you may exchange your shares into shares of the same class of other
American Funds without a sales charge. Class A, C or F-1 shares may generally be
exchanged into the corresponding 529 share class without a sales charge. Class B
shares may not be exchanged into Class 529-B shares. EXCHANGES FROM CLASS A, C
OR F-1 SHARES TO THE CORRESPONDING 529 SHARE CLASS, PARTICULARLY IN THE CASE OF
UNIFORM GIFTS TO MINORS ACT OR UNIFORM TRANSFERS TO MINORS ACT CUSTODIAL
ACCOUNTS, MAY RESULT IN SIGNIFICANT LEGAL AND TAX CONSEQUENCES AS DESCRIBED IN
THE APPLICABLE PROGRAM DESCRIPTION. PLEASE CONSULT YOUR FINANCIAL ADVISER BEFORE
MAKING SUCH AN EXCHANGE.
19
Fundamental Investors / Prospectus
<PAGE>
Exchanges of shares from American Funds money market funds initially purchased
without a sales charge generally will be subject to the appropriate sales
charge. For purposes of computing the contingent deferred sales charge on Class
B and C shares, the length of time you have owned your shares will be measured
from the date of original purchase and will not be affected by any permitted
exchange.
Exchanges have the same tax consequences as ordinary sales and purchases. For
example, to the extent you exchange shares held in a taxable account that are
worth more now than what you paid for them, the gain will be subject to
taxation. See "Transactions by telephone, fax or the Internet" in this
prospectus for information regarding electronic exchanges.
FREQUENT TRADING OF FUND SHARES
The fund and American Funds Distributors reserve the right to reject any
purchase order for any reason. The fund is not designed to serve as a vehicle
for frequent trading. Frequent trading of fund shares may lead to increased
costs to the fund and less efficient management of the fund's portfolio,
potentially resulting in dilution of the value of the shares held by long-term
shareholders. Accordingly, purchases, including those that are part of exchange
activity that the fund or American Funds Distributors has determined could
involve actual or potential harm to the fund, may be rejected.
The fund, through its transfer agent, American Funds Service Company, maintains
surveillance procedures that are designed to detect frequent trading in fund
shares. Under these procedures, various analytics are used to evaluate factors
that may be indicative of frequent trading. For example, transactions in fund
shares that exceed certain monetary thresholds may be scrutinized. American
Funds Service Company also may review transactions that occur close in time to
other transactions in the same account or in multiple accounts under common
ownership or influence. Trading activity that is identified through these
procedures or as a result of any other information available to the fund will be
evaluated to determine whether such activity might constitute frequent trading.
These procedures may be modified from time to time as appropriate to improve the
detection of frequent trading, to facilitate monitoring for frequent trading in
particular retirement plans or other accounts, and to comply with applicable
laws.
In addition to the fund's broad ability to restrict potentially harmful trading
as described above, the fund's board of directors has adopted a "purchase
blocking policy" under which any shareholder redeeming shares having a value of
$5,000 or more from the fund will be precluded from investing in the fund for 30
calendar days after the redemption transaction. This policy also applies to
redemptions and investments that are part of exchange transactions. Under the
fund's purchase blocking policy, certain purchases will not be prevented and
certain redemptions will not trigger a purchase block, such as: systematic
redemptions and purchases where the entity maintaining the shareholder account
is able to identify the transaction as a systematic redemption or purchase;
purchases and redemptions of shares having a value of less than $5,000;
transactions in Class 529
20
Fundamental Investors / Prospectus
<PAGE>
shares; purchases and redemptions resulting from reallocations by American Funds
Target Date Retirement Series/(R)/; retirement plan contributions, loans and
distributions (including hardship withdrawals) identified as such on the
retirement plan recordkeeper's system; and purchase transactions involving
transfers of assets, rollovers, Roth IRA conversions and IRA
recharacterizations, where the entity maintaining the shareholder account is
able to identify the transaction as one of these types of transactions.
The fund reserves the right to waive the purchase blocking policy with respect
to specific shareholder accounts in those instances where American Funds Service
Company determines that its surveillance procedures are adequate to detect
frequent trading in fund shares.
American Funds Service Company will work with certain intermediaries (such as
investment dealers holding shareholder accounts in street name, retirement plan
recordkeepers, insurance company separate accounts and bank trust companies) to
apply their own procedures, provided that American Funds Service Company
believes the intermediary's procedures are reasonably designed to enforce the
frequent trading policies of the fund. You should refer to disclosures provided
by the intermediaries with which you have an account to determine the specific
trading restrictions that apply to you.
If American Funds Service Company identifies any activity that may constitute
frequent trading, it reserves the right to contact the intermediary and request
that the intermediary either provide information regarding an account owner's
transactions or restrict the account owner's trading. If American Funds Service
Company is not satisfied that the intermediary has taken appropriate action,
American Funds Service Company may terminate the intermediary's ability to
transact in fund shares.
There is no guarantee that all instances of frequent trading in fund shares will
be prevented.
NOTWITHSTANDING THE FUND'S SURVEILLANCE PROCEDURES AND PURCHASE BLOCKING POLICY,
ALL TRANSACTIONS IN FUND SHARES REMAIN SUBJECT TO THE FUND'S AND AMERICAN FUNDS
DISTRIBUTORS' RIGHT TO RESTRICT POTENTIALLY ABUSIVE TRADING GENERALLY (INCLUDING
THE TYPES OF TRANSACTIONS DESCRIBED ABOVE THAT WILL NOT BE PREVENTED OR TRIGGER
A BLOCK UNDER THE PURCHASE BLOCKING POLICY). SEE THE STATEMENT OF ADDITIONAL
INFORMATION FOR MORE INFORMATION ABOUT HOW AMERICAN FUNDS SERVICE COMPANY MAY
ADDRESS OTHER POTENTIALLY ABUSIVE TRADING ACTIVITY IN THE AMERICAN FUNDS.
21
Fundamental Investors / Prospectus
<PAGE>
PURCHASE MINIMUMS AND MAXIMUMS
PURCHASE MINIMUMS FOR ALL CLASSES OF SHARES/1/
-------------------------------------------------------------------------------
To establish an account (including retirement plan and 529 $ 250/2/
accounts)
For a payroll deduction retirement plan account, payroll
deduction 25
savings plan account or employer-sponsored 529 account
To add to an account 50
For a payroll deduction retirement plan account, payroll 25
deduction
savings plan account or employer-sponsored 529 account
-------------------------------------------------------------------------------
PURCHASE MAXIMUM PER TRANSACTION FOR CLASS B SHARES 50,000
-------------------------------------------------------------------------------
PURCHASE MAXIMUM PER TRANSACTION FOR CLASS C SHARES 500,000
1 Purchase minimums may be waived in certain cases. Please see the statement of
additional information for details.
2 For accounts established with an automatic investment plan, the initial
purchase minimum of $250 may be waived if the purchases (including purchases
through exchanges from another fund) made under the plan are sufficient to
reach $250 within five months of account establishment.
The effective purchase maximums for Class 529-A, 529-C, 529-E and 529-F-1 shares
will reflect the maximum applicable contribution limits under state law. See the
applicable program description for more information.
If you have significant American Funds holdings, you may not be eligible to
invest in Class B or C shares (or their corresponding 529 share classes).
Specifically, you may not purchase Class B or 529-B shares if you are eligible
to purchase Class A or 529-A shares at the $100,000 or higher sales charge
discount rate, and you may not purchase Class C or 529-C shares if you are
eligible to purchase Class A or 529-A shares at the $1 million or more sales
charge discount rate (i.e., at net asset value). See "Sales charge reductions
and waivers" in this prospectus and the statement of additional information for
more information regarding sales charge discounts.
VALUING SHARES
The net asset value of each share class of the fund is the value of a single
share. The fund calculates the net asset value each day the New York Stock
Exchange is open for trading as of approximately 4 p.m. New York time, the
normal close of regular trading. Assets are valued primarily on the basis of
market quotations. However, the fund has adopted procedures for making "fair
value" determinations if market quotations are not readily available or are not
considered reliable. For example, if events occur between the close of markets
outside the United States and the close of regular trading on the New York Stock
Exchange that, in the opinion of the investment adviser, materially affect the
value of any of the fund's securities that principally trade in those
international markets, those securities will be valued in accordance with fair
value procedures. Use of these procedures is intended to result in more
appropriate net asset values. In addition, such use will reduce, if not
eliminate, potential arbitrage opportunities otherwise available to short-term
investors.
Because the fund may hold securities that are primarily listed on foreign
exchanges that trade on weekends or days when the fund does not price its
shares, the value of securities
22
Fundamental Investors / Prospectus
<PAGE>
held in the fund may change on days when you will not be able to purchase or
redeem fund shares.
Your shares will be purchased at the net asset value (plus any applicable sales
charge in the case of Class A shares) or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request. A contingent deferred sales charge may apply at the time you sell
certain Class A, B and C shares.
MOVING BETWEEN SHARE CLASSES AND ACCOUNTS
Please see the statement of additional information for details and limitations
on moving investments in certain share classes to different share classes, and
on moving investments held in certain accounts to different accounts.
Sales charges
CLASS A SHARES
The initial sales charge you pay each time you buy Class A shares differs
depending upon the amount you invest and may be reduced or eliminated for larger
purchases as indicated below. The "offering price," the price you pay to buy
shares, includes any applicable sales charge, which will be deducted directly
from your investment. Shares acquired through reinvestment of dividends or
capital gain distributions are not subject to an initial sales charge.
SALES CHARGE AS A
PERCENTAGE OF:
DEALER
NET COMMISSION
OFFERING AMOUNT AS A PERCENTAGE
INVESTMENT PRICE INVESTED OF OFFERING PRICE
------------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 5.00%
------------------------------------------------------------------------------
$25,000 but less than $50,000 5.00 5.26 4.25
------------------------------------------------------------------------------
$50,000 but less than $100,000 4.50 4.71 3.75
------------------------------------------------------------------------------
$100,000 but less than $250,000 3.50 3.63 2.75
------------------------------------------------------------------------------
$250,000 but less than $500,000 2.50 2.56 2.00
------------------------------------------------------------------------------
$500,000 but less than $750,000 2.00 2.04 1.60
------------------------------------------------------------------------------
$750,000 but less than $1 million 1.50 1.52 1.20
------------------------------------------------------------------------------
$1 million or more and certain other none none see below
investments described below
------------------------------------------------------------------------------
The sales charge, expressed as a percentage of the offering price or the net
amount invested, may be higher or lower than the percentages described in the
table above due to rounding. This is because the dollar amount of the sales
charge is determined by subtracting the net asset value of the shares purchased
from the offering price, which is calculated
23
Fundamental Investors / Prospectus
<PAGE>
to two decimal places using standard rounding criteria. The impact of rounding
will vary with the size of the investment and the net asset value of the shares.
Similarly, any contingent deferred sales charge paid by you on investments in
Class A shares may be higher or lower than the 1% charge described below due to
rounding.
EXCEPT AS PROVIDED BELOW, INVESTMENTS IN CLASS A SHARES OF $1 MILLION OR MORE
MAY BE SUBJECT TO A 1% CONTINGENT DEFERRED SALES CHARGE IF THE SHARES ARE SOLD
WITHIN ONE YEAR OF PURCHASE. The contingent deferred sales charge is based on
the original purchase cost or the current market value of the shares being sold,
whichever is less.
CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES
The following investments are not subject to any initial or contingent deferred
sales charge if American Funds Service Company is properly notified of the
nature of the investment:
. investments in Class A shares made by endowments or foundations with $50
million or more in assets;
. investments made by accounts that are part of certain qualified fee-based
programs and that purchased Class A shares before the discontinuation of your
investment dealer's load-waived Class A share program with the American Funds;
and
. certain rollover investments from retirement plans to IRAs (see "Rollovers
from retirement plans to IRAs" in this prospectus for more information).
The distributor may pay dealers up to 1% on investments made in Class A shares
with no initial sales charge. The fund may reimburse the distributor for these
payments through its plans of distribution (see "Plans of distribution" in this
prospectus).
Transfers from certain 529 plans to plans managed by the American Funds
organization will be made with no sales charge. No commission will be paid to
the dealer on such a transfer. Please see the statement of additional
information for more information.
Certain other investors may qualify to purchase shares without a sales charge,
such as employees of investment dealers and registered investment advisers
authorized to sell American Funds and employees of The Capital Group Companies.
Please see the statement of additional information for more information.
EMPLOYER-SPONSORED RETIREMENT PLANS
Many employer-sponsored retirement plans are eligible to purchase Class R
shares. Such eligible plans and Class R shares are described in more detail in
the fund's retirement plan prospectus.
Employer-sponsored retirement plans that are eligible to purchase Class R
shares may instead purchase Class A shares and pay the applicable Class A sales
charge, provided their recordkeepers can properly apply a sales charge on plan
investments. These plans are not eligible to make initial purchases of $1
million or more in Class A shares and thereby invest in Class A shares without
a sales charge, nor are they eligible to
24
Fundamental Investors / Prospectus
<PAGE>
establish a statement of intention that qualifies them to purchase Class A
shares without a sales charge. More information about statements of intention
can be found under "Sales charge reductions and waivers" in this prospectus.
Plans investing in Class A shares with a sales charge may purchase additional
Class A shares in accordance with the sales charge table in this prospectus.
Employer-sponsored retirement plans that invested in Class A shares without any
sales charge on or before March 31, 2004, and that continue to meet the
eligibility requirements in effect as of that date for purchasing Class A
shares at net asset value, may continue to purchase Class A shares without any
initial or contingent deferred sales charge.
A 403(b) plan may not invest in Class A, B or C shares on or after January 1,
2009, unless such plan was invested in Class A, B or C shares prior to that
date.
CLASS B AND C SHARES
Class B and C shares are sold without any initial sales charge. American Funds
Distributors pays 4% of the amount invested to dealers who sell Class B shares
and 1% to dealers who sell Class C shares.
For Class B shares, a contingent deferred sales charge may be applied to shares
you sell within six years of purchase, as shown in the table below.
CONTINGENT DEFERRED SALES CHARGE ON CLASS B SHARES
YEAR OF REDEMPTION: 1 2 3 4 5 6 7+
----------------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGE: 5% 4% 4% 3% 2% 1% 0%
For Class C shares, a contingent deferred sales charge of 1% applies if shares
are sold within one year of purchase.
Any contingent deferred sales charge paid by you on investments in Class B or C
shares, expressed as a percentage of the applicable redemption amount, may be
higher or lower than the percentages described above due to rounding.
Shares acquired through reinvestment of dividends or capital gain distributions
are not subject to a contingent deferred sales charge. In addition, the
contingent deferred sales charge may be waived in certain circumstances. See
"Contingent deferred sales charge waivers" in this prospectus. The contingent
deferred sales charge is based on the original purchase cost or the current
market value of the shares being sold, whichever is less. For purposes of
determining the contingent deferred sales charge, if you sell only some of your
shares, shares that are not subject to any contingent deferred sales charge will
be sold first, followed by shares that you have owned the longest.
See "Plans of distribution" in this prospectus for ongoing compensation paid to
your dealer or financial adviser for all share classes.
25
Fundamental Investors / Prospectus
<PAGE>
AUTOMATIC CONVERSION OF CLASS B AND C SHARES
Class B shares automatically convert to Class A shares in the month of the
eight-year anniversary of the purchase date. Class C shares automatically
convert to Class F-1 shares in the month of the 10-year anniversary of the
purchase date; however, Class 529-C shares will not convert to Class 529-F-1
shares. The Internal Revenue Service currently takes the position that these
automatic conversions are not taxable. Should its position change, the automatic
conversion feature may be suspended. If this happens, you would have the option
of converting your Class B, 529-B or C shares to the respective share classes at
the anniversary dates described above. This exchange would be based on the
relative net asset values of the two classes in question, without the imposition
of a sales charge or fee, but you might face certain tax consequences as a
result.
CLASS 529-E AND CLASS F SHARES
Class 529-E and Class F shares are sold without any initial or contingent
deferred sales charge.
Sales charge reductions and waivers
TO RECEIVE A REDUCTION IN YOUR CLASS A INITIAL SALES CHARGE, YOU MUST LET YOUR
FINANCIAL ADVISER OR AMERICAN FUNDS SERVICE COMPANY KNOW AT THE TIME YOU
PURCHASE SHARES THAT YOU QUALIFY FOR SUCH A REDUCTION. IF YOU DO NOT LET YOUR
ADVISER OR AMERICAN FUNDS SERVICE COMPANY KNOW THAT YOU ARE ELIGIBLE FOR A
REDUCTION, YOU MAY NOT RECEIVE A SALES CHARGE DISCOUNT TO WHICH YOU ARE
OTHERWISE ENTITLED. In order to determine your eligibility to receive a sales
charge discount, it may be necessary for you to provide your adviser or American
Funds Service Company with information and records (including account
statements) of all relevant accounts invested in the American Funds. To have
your Class A, B or C contingent deferred sales charge waived, you must let your
adviser or American Funds Service Company know at the time you redeem shares
that you qualify for such a waiver.
IN ADDITION TO THE INFORMATION IN THIS PROSPECTUS, YOU MAY OBTAIN MORE
INFORMATION ABOUT SHARE CLASSES, SALES CHARGES AND SALES CHARGE REDUCTIONS AND
WAIVERS THROUGH A LINK ON THE HOME PAGE OF THE AMERICAN FUNDS WEBSITE AT
AMERICANFUNDS.COM, FROM THE STATEMENT OF ADDITIONAL INFORMATION OR FROM YOUR
FINANCIAL ADVISER.
REDUCING YOUR CLASS A INITIAL SALES CHARGE
Consistent with the policies described in this prospectus, you and your
"immediate family" (your spouse -- or equivalent if recognized under local law
-- and your children under the age of 21) may combine all of your American Funds
investments to reduce your Class A sales charge. Certain investments in the
American Funds Target Date Retirement Series may also be combined for this
purpose. Please see the American Funds Target Date
26
Fundamental Investors / Prospectus
<PAGE>
Retirement Series prospectus for further information. However, for this purpose,
investments representing direct purchases of American Funds money market funds
are excluded. Following are different ways that you may qualify for a reduced
Class A sales charge:
AGGREGATING ACCOUNTS
To receive a reduced Class A sales charge, investments made by you and your
immediate family (see above) may be aggregated if made for your own account(s)
and/or certain other accounts, such as:
. trust accounts established by the above individuals (please see the statement
of additional information for details regarding aggregation of trust accounts
where the person(s) who established the trust is/are deceased);
. solely controlled business accounts; and
. single-participant retirement plans.
CONCURRENT PURCHASES
You may combine simultaneous purchases (including, upon your request, purchases
for gifts) of any class of shares of two or more American Funds (excluding
American Funds money market funds) to qualify for a reduced Class A sales
charge.
RIGHTS OF ACCUMULATION
You may take into account your accumulated holdings in all share classes of the
American Funds (excluding American Funds money market funds) to determine the
initial sales charge you pay on each purchase of Class A shares. Subject to
your investment dealer's capabilities, your accumulated holdings will be
calculated as the higher of (a) the current value of your existing holdings or
(b) the amount you invested (including reinvested dividends and capital gains,
but excluding capital appreciation) less any withdrawals. Please see the
statement of additional information for details. You should retain any records
necessary to substantiate the historical amounts you have invested.
If you make a gift of shares, upon your request you may purchase the shares at
the sales charge discount allowed under rights of accumulation of all of your
American Funds accounts.
STATEMENT OF INTENTION
You may reduce your Class A sales charge by establishing a statement of
intention. A statement of intention allows you to combine all purchases of all
share classes of the American Funds (excluding American Funds money market
funds) you intend to make over a 13-month period to determine the applicable
sales charge; however, purchases made under a right of reinvestment,
appreciation of your holdings, and reinvested dividends and capital gains do
not count as purchases made during the statement
27
Fundamental Investors / Prospectus
<PAGE>
period. The market value of your existing holdings eligible to be aggregated as
of the day immediately before the start of the statement period may be credited
toward satisfying the statement. A portion of your account may be held in
escrow to cover additional Class A sales charges that may be due if your total
purchases over the statement period do not qualify you for the applicable sales
charge reduction. Employer-sponsored retirement plans may be restricted from
establishing statements of intention. See "Sales charges" in this prospectus
for more information.
RIGHT OF REINVESTMENT
Please see "How to sell shares" in this prospectus for information on how to
reinvest proceeds from a redemption, dividend payment or capital gain
distribution without a sales charge.
CONTINGENT DEFERRED SALES CHARGE WAIVERS
The contingent deferred sales charge on Class A, B and C shares may be waived in
the following cases:
. permitted exchanges of shares, except if shares acquired by exchange are then
redeemed within the period during which a contingent deferred sales charge
would apply to the initial shares purchased;
. tax-free returns of excess contributions to IRAs;
. redemptions due to death or postpurchase disability of the shareholder (this
generally excludes accounts registered in the names of trusts and other
entities);
. for 529 share classes only, redemptions due to a beneficiary's death,
postpurchase disability or receipt of a scholarship (to the extent of the
scholarship award);
. redemptions due to the complete termination of a trust upon the death of the
trustor/ grantor or beneficiary, but only if such termination is specifically
provided for in the trust document; and
. the following types of transactions, if together they do not exceed 12% of the
value of an account annually (see the statement of additional information for
more information about waivers regarding these types of transactions):
-- redemptions due to receiving required minimum distributions from retirement
accounts upon reaching age 70 1/2 (required minimum distributions that
continue to be taken by the beneficiary(ies) after the account owner is
deceased also qualify for a waiver); and
-- if you have established an automatic withdrawal plan, redemptions through
such a plan (including any dividends and/or capital gain distributions taken
in cash).
28
Fundamental Investors / Prospectus
<PAGE>
Rollovers from retirement plans to IRAs
Assets from retirement plans may be invested in Class A, B, C or F shares
through an IRA rollover, subject to the other provisions of this prospectus.
Rollovers invested in Class A shares from retirement plans will be subject to
applicable sales charges. The following rollovers to Class A shares will be made
without a sales charge:
. rollovers to IRAs from 403(b) plans with Capital Bank and Trust Company as
custodian; and
. rollovers to IRAs that are attributable to American Funds investments, if they
meet the following requirements:
-- the assets being rolled over were invested in American Funds at the time of
distribution; and
-- the rolled over assets are contributed to an American Funds IRA with Capital
Bank and Trust Company as custodian.
IRA rollover assets that roll over without a sales charge as described above
will not be subject to a contingent deferred sales charge and investment dealers
will be compensated solely with an annual service fee that begins to accrue
immediately. IRA rollover assets invested in Class A shares that are not
attributable to American Funds investments, as well as future contributions to
the IRA, will be subject to sales charges and the terms and conditions generally
applicable to Class A share investments as described in this prospectus and the
statement of additional information.
Plans of distribution
The fund has plans of distribution or "12b-1 plans" for certain share classes,
under which it may finance activities primarily intended to sell shares,
provided the categories of expenses are approved in advance by the fund's board
of directors. The plans provide for payments, based on annualized percentages of
average daily net assets, of up to .25% for Class A shares; up to .50% for Class
529-A shares; up to 1.00% for Class B and 529-B shares; up to 1.00% for Class C
and 529-C shares; up to .75% for Class 529-E shares; and up to .50% for Class
F-1 and 529-F-1 shares. For all share classes indicated above, up to .25% of
these expenses may be used to pay service fees to qualified dealers for
providing certain shareholder services. The amount remaining for each share
class may be used for distribution expenses.
The 12b-1 fees paid by the fund, as a percentage of average net assets for the
previous fiscal year, are indicated in the Annual Fund Operating Expenses table
under "Fees and expenses of the fund" in this prospectus. Since these fees are
paid out of the fund's assets or income on an ongoing basis, over time they will
increase the cost and reduce the return of your investment. The higher fees for
Class B and C shares may cost you more over time than paying the initial sales
charge for Class A shares.
29
Fundamental Investors / Prospectus
<PAGE>
Other compensation to dealers
American Funds Distributors, at its expense, currently provides additional
compensation to investment dealers. These payments may be made, at the
discretion of American Funds Distributors, to the top 100 dealers (or their
affiliates) that have sold shares of the American Funds. The level of payments
made to a qualifying firm in any given year will vary and in no case would
exceed the sum of (a) .10% of the previous year's American Funds sales by that
dealer and (b) .02% of American Funds assets attributable to that dealer. For
calendar year 2008, aggregate payments made by American Funds Distributors to
dealers were less than .02% of the average assets of the American Funds.
Aggregate payments may also change from year to year. A number of factors will
be considered in determining payments, including the qualifying dealer's sales,
assets and redemption rates, and the quality of the dealer's relationship with
American Funds Distributors. American Funds Distributors makes these payments to
help defray the costs incurred by qualifying dealers in connection with efforts
to educate financial advisers about the American Funds so that they can make
recommendations and provide services that are suitable and meet shareholder
needs. American Funds Distributors will, on an annual basis, determine the
advisability of continuing these payments. American Funds Distributors may also
pay expenses associated with meetings conducted by dealers outside the top 100
firms to facilitate educating financial advisers and shareholders about the
American Funds. If investment advisers, distributors or other affiliates of
mutual funds pay additional compensation or other incentives in differing
amounts, dealer firms and their advisers may have financial incentives for
recommending a particular mutual fund over other mutual funds. You should
consult with your financial adviser and review carefully any disclosure by your
financial adviser's firm as to compensation received.
How to sell shares
You may sell (redeem) shares in any of the following ways:
THROUGH YOUR DEALER OR FINANCIAL ADVISER (CERTAIN CHARGES MAY APPLY)
. Shares held for you in your dealer's name must be sold through the dealer.
. Class F shares must be sold through your dealer or financial adviser.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
. Requests must be signed by the registered shareholder(s).
. A signature guarantee is required if the redemption is:
-- more than $75,000;
-- made payable to someone other than the registered shareholder(s); or
-- sent to an address other than the address of record or to an address of
record that has been changed within the last 10 days.
30
Fundamental Investors / Prospectus
<PAGE>
. American Funds Service Company reserves the right to require signature
guarantee(s) on any redemption.
. Additional documentation may be required for redemptions of shares held in
corporate, partnership or fiduciary accounts.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY OR USING THE INTERNET
. Redemptions by telephone, fax or the Internet (including American FundsLine
and americanfunds.com) are limited to $75,000 per American Funds shareholder
each day.
. Checks must be made payable to the registered shareholder.
. Checks must be mailed to an address of record that has been used with the
account for at least 10 days.
If you recently purchased shares and subsequently request a redemption of those
shares, you will receive proceeds from the redemption once a sufficient period
of time has passed to reasonably ensure that checks or drafts (including
certified or cashier's checks) for the shares purchased have cleared (normally
10 business days).
RIGHT OF REINVESTMENT
If you notify American Funds Service Company, you may reinvest proceeds from a
redemption, dividend payment or capital gain distribution without a sales charge
in the same fund or other American Funds provided that the reinvestment occurs
within 90 days after the date of the redemption or distribution and is made into
the same account from which you redeemed the shares or received the
distribution. If the account has been closed, you may reinvest without a sales
charge if the new receiving account has the same registration as the closed
account. Proceeds from a Class B share redemption made during the contingent
deferred sales charge period will be reinvested in Class A shares. If you redeem
Class B shares after the contingent deferred sales charge period, you may either
reinvest the proceeds in Class B shares or purchase Class A shares; if you
purchase Class A shares, you are responsible for paying any applicable Class A
sales charges. Proceeds from any other type of redemption and all dividend
payments and capital gain distributions will be reinvested in the same share
class from which the original redemption or distribution was made. Any
contingent deferred sales charge on Class A or C shares will be credited to your
account. Redemption proceeds of Class A shares representing direct purchases in
American Funds money market funds that are reinvested in non-money market
American Funds will be subject to a sales charge. Proceeds will be reinvested at
the next calculated net asset value after your request is received and accepted
by American Funds Service Company. For purposes of this "right of reinvestment
policy," automatic transactions (including, for example, automatic purchases,
withdrawals and payroll deductions) and ongoing retirement plan contributions
are not eligible for investment without a sales charge. See the statement of
additional information for further information. You may not reinvest proceeds in
the American Funds as described in this
31
Fundamental Investors / Prospectus
<PAGE>
paragraph if such proceeds are subject to a purchase block as described under
"Frequent trading of fund shares" in this prospectus. This paragraph does not
apply to certain rollover investments as described under "Rollovers from
retirement plans to IRAs" in this prospectus.
TRANSACTIONS BY TELEPHONE, FAX OR THE INTERNET
Generally, you are automatically eligible to redeem or exchange shares by
telephone, fax or the Internet, unless you notify us in writing that you do not
want any or all of these services. You may reinstate these services at any time.
Unless you decide not to have telephone, fax or Internet services on your
account(s), you agree to hold the fund, American Funds Service Company, any of
its affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from any
losses, expenses, costs or liabilities (including attorney fees) that may be
incurred in connection with the exercise of these privileges, provided American
Funds Service Company employs reasonable procedures to confirm that the
instructions received from any person with appropriate account information are
genuine. If reasonable procedures are not employed, American Funds Service
Company and/or the fund may be liable for losses due to unauthorized or
fraudulent instructions.
Distributions and taxes
DIVIDENDS AND DISTRIBUTIONS
The fund intends to distribute dividends to you, usually in February, May,
August and December.
Capital gains, if any, are usually distributed in December and February. When a
dividend or capital gain is distributed, the net asset value per share is
reduced by the amount of the payment.
You may elect to reinvest dividends and/or capital gain distributions to
purchase additional shares of this fund or other American Funds, or you may
elect to receive them in cash. Most shareholders do not elect to take capital
gain distributions in cash because these distributions reduce principal value.
Dividends and capital gain distributions for 529 share classes will be
automatically reinvested.
TAXES ON DIVIDENDS AND DISTRIBUTIONS
Dividends and capital gain distributions you receive from the fund will be
subject to federal income tax and may also be subject to state or local taxes --
unless you are exempt from taxation.
32
Fundamental Investors / Prospectus
<PAGE>
For federal tax purposes, dividends and distributions of short-term capital
gains are taxable as ordinary income. Some or all of your dividends may be
eligible for a reduced tax rate if you meet a holding period requirement. The
fund's distributions of net long-term capital gains are taxable as long-term
capital gains. Any dividends or capital gain distributions you receive from the
fund will normally be taxable to you when made, regardless of whether you
reinvest dividends or capital gain distributions or receive them in cash.
TAXES ON TRANSACTIONS
Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment is the
difference between the cost of your shares, including any sales charges, and the
amount you receive when you sell them.
SHAREHOLDER FEES
Fees borne directly by the fund normally have the effect of reducing a
shareholder's taxable income on distributions. By contrast, fees paid directly
to advisers by a fund shareholder for ongoing advice are deductible for income
tax purposes only to the extent that they (combined with certain other
qualifying expenses) exceed 2% of such shareholder's adjusted gross income.
PLEASE SEE YOUR TAX ADVISER FOR MORE INFORMATION. HOLDERS OF 529 SHARES SHOULD
REFER TO THE APPLICABLE PROGRAM DESCRIPTION FOR MORE INFORMATION REGARDING THE
TAX CONSEQUENCES OF SELLING 529 SHARES.
33
Fundamental Investors / Prospectus
<PAGE>
Financial highlights
The Financial Highlights table is intended to help you understand the fund's
results for the past five fiscal years. Certain information reflects financial
results for a single share of a particular class. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the fund (assuming reinvestment of all dividends and capital gain
distributions). Where indicated, figures in the table reflect the impact, if
any, of certain reimbursements/waivers from Capital Research and Management
Company. For more information about these reimbursements/waivers, see the
footnotes to the Annual Fund Operating Expenses table under "Fees and expenses
of the fund" in this prospectus and the fund's annual report. The information in
the Financial Highlights table has been audited by Deloitte & Touche LLP, whose
report, along with the fund's financial statements, is included in the statement
of additional information, which is available upon request.
(LOSS) INCOME FROM INVESTMENT OPERATIONS/1/ DIVIDENDS AND DISTRIBUTIONS
Net (losses)
gains on
securities
Net asset (both Dividends Distributions
value, Net realized Total from (from net (from
beginning investment and investment investment capital
of year income/2/ unrealized) operations income) gains)
----------------------------------------------------------------------------------------------------------------------------
CLASS A:
Year ended 12/31/2008 $42.45 $ .60 $(17.23) $(16.63) $ (.58) $ (.26)
Year ended 12/31/2007 40.05 1.03 4.39 5.42 (.95) (2.07)
Year ended 12/31/2006 35.40 .62 6.16 6.78 (.56) (1.57)
Year ended 12/31/2005 32.25 .58 3.16 3.74 (.59) --
Year ended 12/31/2004 28.85 .61 3.35 3.96 (.56) --
----------------------------------------------------------------------------------------------------------------------------
CLASS B:
Year ended 12/31/2008 42.35 .34 (17.20) (16.86) (.31) (.26)
Year ended 12/31/2007 39.96 .70 4.38 5.08 (.62) (2.07)
Year ended 12/31/2006 35.33 .32 6.14 6.46 (.26) (1.57)
Year ended 12/31/2005 32.19 .33 3.15 3.48 (.34) --
Year ended 12/31/2004 28.80 .38 3.35 3.73 (.34) --
----------------------------------------------------------------------------------------------------------------------------
CLASS C:
Year ended 12/31/2008 42.31 .32 (17.17) (16.85) (.30) (.26)
Year ended 12/31/2007 39.92 .70 4.36 5.06 (.60) (2.07)
Year ended 12/31/2006 35.30 .30 6.13 6.43 (.24) (1.57)
Year ended 12/31/2005 32.17 .30 3.15 3.45 (.32) --
Year ended 12/31/2004 28.78 .37 3.34 3.71 (.32) --
----------------------------------------------------------------------------------------------------------------------------
(The Financial Highlights table continues on the following page.)
CLASS F-1:
Year ended 12/31/2008 $42.43 $ .60 $(17.22) $(16.62) $ (.58) $ (.26)
Year ended 12/31/2007 40.03 1.06 4.36 5.42 (.95) (2.07)
Year ended 12/31/2006 35.39 .62 6.15 6.77 (.56) (1.57)
Year ended 12/31/2005 32.24 .57 3.16 3.73 (.58) --
Year ended 12/31/2004 28.84 .59 3.35 3.94 (.54) --
----------------------------------------------------------------------------------------------------------------------------
CLASS F-2:
Period from 8/1/2008 to 12/31/2008/5/ 37.09 .23 (11.97) (11.74) (.37) --
----------------------------------------------------------------------------------------------------------------------------
CLASS 529-A:
Year ended 12/31/2008 42.42 .58 (17.21) (16.63) (.56) (.26)
Year ended 12/31/2007 40.02 1.03 4.36 5.39 (.92) (2.07)
Year ended 12/31/2006 35.38 .60 6.15 6.75 (.54) (1.57)
Year ended 12/31/2005 32.24 .55 3.15 3.70 (.56) --
Year ended 12/31/2004 28.84 .59 3.34 3.93 (.53) --
----------------------------------------------------------------------------------------------------------------------------
CLASS 529-B:
Year ended 12/31/2008 42.41 .30 (17.22) (16.92) (.27) (.26)
Year ended 12/31/2007 40.01 .66 4.38 5.04 (.57) (2.07)
Year ended 12/31/2006 35.37 .27 6.16 6.43 (.22) (1.57)
Year ended 12/31/2005 32.23 .27 3.16 3.43 (.29) --
Year ended 12/31/2004 28.83 .33 3.35 3.68 (.28) --
----------------------------------------------------------------------------------------------------------------------------
CLASS 529-C:
Year ended 12/31/2008 42.40 .30 (17.22) (16.92) (.27) (.26)
Year ended 12/31/2007 40.00 .67 4.37 5.04 (.57) (2.07)
Year ended 12/31/2006 35.37 .28 6.14 6.42 (.22) (1.57)
Year ended 12/31/2005 32.23 .27 3.16 3.43 (.29) --
Year ended 12/31/2004 28.83 .34 3.34 3.68 (.28) --
----------------------------------------------------------------------------------------------------------------------------
CLASS 529-E:
Year ended 12/31/2008 $42.40 $ .48 $(17.21) $(16.73) $ (.46) $ (.26)
Year ended 12/31/2007 40.00 .88 4.38 5.26 (.79) (2.07)
Year ended 12/31/2006 35.36 .48 6.15 6.63 (.42) (1.57)
Year ended 12/31/2005 32.23 .44 3.15 3.59 (.46) --
Year ended 12/31/2004 28.83 .49 3.35 3.84 (.44) --
----------------------------------------------------------------------------------------------------------------------------
CLASS 529-F-1:
Year ended 12/31/2008 42.39 .64 (17.19) (16.55) (.63) (.26)
Year ended 12/31/2007 40.00 1.13 4.33 5.46 (1.00) (2.07)
Year ended 12/31/2006 35.36 .67 6.15 6.82 (.61) (1.57)
Year ended 12/31/2005 32.22 .59 3.15 3.74 (.60) --
Year ended 12/31/2004 28.82 .58 3.33 3.91 (.51) --
Ratio of Ratio of
expenses expenses
to average to average
net assets net assets
Total Net asset Net assets, before after
dividends value, end of reim- reim-
and end of Total year bursements/ bursements/
distributions year return/3,4/ (in millions) waivers waivers/4/
-------------------------------------------------------------------------------------------------------------------------
CLASS A:
Year ended 12/31/2008 $ (.84) $24.98 (39.70)% $24,443 .63% .61%
Year ended 12/31/2007 (3.02) 42.45 13.55 38,877 .60 .57
Year ended 12/31/2006 (2.13) 40.05 19.24 32,187 .61 .58
Year ended 12/31/2005 (.59) 35.40 11.68 24,390 .62 .60
Year ended 12/31/2004 (.56) 32.25 13.91 21,543 .63 .63
-------------------------------------------------------------------------------------------------------------------------
CLASS B:
Year ended 12/31/2008 (.57) 24.92 (40.14) 924 1.39 1.37
Year ended 12/31/2007 (2.69) 42.35 12.70 1,667 1.36 1.33
Year ended 12/31/2006 (1.83) 39.96 18.33 1,417 1.38 1.35
Year ended 12/31/2005 (.34) 35.33 10.84 1,090 1.39 1.36
Year ended 12/31/2004 (.34) 32.19 13.03 971 1.40 1.39
-------------------------------------------------------------------------------------------------------------------------
CLASS C:
Year ended 12/31/2008 (.56) 24.90 (40.16) 1,468 1.43 1.41
Year ended 12/31/2007 (2.67) 42.31 12.65 2,053 1.41 1.38
Year ended 12/31/2006 (1.81) 39.92 18.23 1,380 1.43 1.41
Year ended 12/31/2005 (.32) 35.30 10.76 776 1.45 1.43
Year ended 12/31/2004 (.32) 32.17 12.96 566 1.47 1.46
-------------------------------------------------------------------------------------------------------------------------
(The Financial Highlights table continues on the following page.)
-------------------------------------------------------------------------------------------------------------------------
CLASS F-1:
Year ended 12/31/2008 $ (.84) $24.97 (39.69)% $ 2,932 .62% .60%
Year ended 12/31/2007 (3.02) 42.43 13.55 3,235 .61 .58
Year ended 12/31/2006 (2.13) 40.03 19.21 1,815 .61 .58
Year ended 12/31/2005 (.58) 35.39 11.64 662 .66 .63
Year ended 12/31/2004 (.54) 32.24 13.84 463 .70 .70
-------------------------------------------------------------------------------------------------------------------------
CLASS F-2:
Period from 8/1/2008 to 12/31/2008/5/ (.37) 24.98 (31.78) 92 .17 .16
-------------------------------------------------------------------------------------------------------------------------
CLASS 529-A:
Year ended 12/31/2008 (.82) 24.97 (39.71) 485 .68 .65
Year ended 12/31/2007 (2.99) 42.42 13.49 643 .66 .64
Year ended 12/31/2006 (2.11) 40.02 19.16 414 .66 .63
Year ended 12/31/2005 (.56) 35.38 11.60 231 .70 .67
Year ended 12/31/2004 (.53) 32.24 13.77 146 .73 .72
-------------------------------------------------------------------------------------------------------------------------
CLASS 529-B:
Year ended 12/31/2008 (.53) 24.96 (40.20) 54 1.50 1.47
Year ended 12/31/2007 (2.64) 42.41 12.57 80 1.48 1.46
Year ended 12/31/2006 (1.79) 40.01 18.18 60 1.50 1.47
Year ended 12/31/2005 (.29) 35.37 10.66 40 1.54 1.52
Year ended 12/31/2004 (.28) 32.23 12.83 29 1.59 1.59
-------------------------------------------------------------------------------------------------------------------------
CLASS 529-C:
Year ended 12/31/2008 (.53) 24.95 (40.21) 147 1.49 1.47
Year ended 12/31/2007 (2.64) 42.40 12.58 195 1.48 1.45
Year ended 12/31/2006 (1.79) 40.00 18.16 126 1.49 1.47
Year ended 12/31/2005 (.29) 35.37 10.68 71 1.53 1.51
Year ended 12/31/2004 (.28) 32.23 12.84 45 1.58 1.58
-------------------------------------------------------------------------------------------------------------------------
CLASS 529-E:
Year ended 12/31/2008 $ (.72) $24.95 (39.90)% $ 21 .98% .96%
Year ended 12/31/2007 (2.86) 42.40 13.14 29 .97 .95
Year ended 12/31/2006 (1.99) 40.00 18.80 20 .97 .95
Year ended 12/31/2005 (.46) 35.36 11.24 12 1.02 .99
Year ended 12/31/2004 (.44) 32.23 13.40 7 1.06 1.05
-------------------------------------------------------------------------------------------------------------------------
CLASS 529-F-1:
Year ended 12/31/2008 (.89) 24.95 (39.59) 20 .48 .46
Year ended 12/31/2007 (3.07) 42.39 13.69 20 .47 .45
Year ended 12/31/2006 (2.18) 40.00 19.40 11 .47 .45
Year ended 12/31/2005 (.60) 35.36 11.68 5 .58 .56
Year ended 12/31/2004 (.51) 32.22 13.73 2 .81 .80
Ratio
of net
income to
average
net
assets/2,4/
----------------------------------------------------
CLASS A:
Year ended 12/31/2008 1.70%
Year ended 12/31/2007 2.40
Year ended 12/31/2006 1.60
Year ended 12/31/2005 1.75
Year ended 12/31/2004 2.05
----------------------------------------------------
CLASS B:
Year ended 12/31/2008 .94
Year ended 12/31/2007 1.63
Year ended 12/31/2006 .83
Year ended 12/31/2005 .99
Year ended 12/31/2004 1.29
----------------------------------------------------
CLASS C:
Year ended 12/31/2008 .90
Year ended 12/31/2007 1.62
Year ended 12/31/2006 .77
Year ended 12/31/2005 .91
Year ended 12/31/2004 1.24
----------------------------------------------------
(The Financial Highlights table continues on the following page.)
CLASS F-1:
Year ended 12/31/2008 1.72%
Year ended 12/31/2007 2.45
Year ended 12/31/2006 1.58
Year ended 12/31/2005 1.71
Year ended 12/31/2004 2.02
----------------------------------------------------
CLASS F-2:
Period from 8/1/2008 to 12/31/2008/5/ .88
----------------------------------------------------
CLASS 529-A:
Year ended 12/31/2008 1.66
Year ended 12/31/2007 2.37
Year ended 12/31/2006 1.55
Year ended 12/31/2005 1.66
Year ended 12/31/2004 2.00
----------------------------------------------------
CLASS 529-B:
Year ended 12/31/2008 .84
Year ended 12/31/2007 1.53
Year ended 12/31/2006 .71
Year ended 12/31/2005 .82
Year ended 12/31/2004 1.13
----------------------------------------------------
CLASS 529-C:
Year ended 12/31/2008 .85
Year ended 12/31/2007 1.56
Year ended 12/31/2006 .71
Year ended 12/31/2005 .83
Year ended 12/31/2004 1.14
----------------------------------------------------
CLASS 529-E:
Year ended 12/31/2008 1.36%
Year ended 12/31/2007 2.05
Year ended 12/31/2006 1.23
Year ended 12/31/2005 1.34
Year ended 12/31/2004 1.66
----------------------------------------------------
CLASS 529-F-1:
Year ended 12/31/2008 1.84
Year ended 12/31/2007 2.62
Year ended 12/31/2006 1.73
Year ended 12/31/2005 1.76
Year ended 12/31/2004 1.95
Fundamental Investors / Prospectus
34
<PAGE>
[This page intentionally left blank for this filing]
35
Fundamental Investors / Prospectus
<PAGE>
YEAR ENDED DECEMBER 31
2008 2007 2006 2005 2004
------------------------------------------------------------------------------------
PORTFOLIO TURNOVER
RATE FOR ALL CLASSES 29% 27% 21% 24% 30%
OF SHARES
1 Based on average shares outstanding.
2 For the year ended December 31, 2007, this column reflects the impact of a
corporate action event that resulted in a one-time increase to net investment
income. If the corporate action had not occurred, the Class A net investment
income per share and ratio of net income to average net assets would have been
lower by $0.39 and 0.90%, respectively. The impact to the other share classes
would have been approximately the same.
3 Total returns exclude any applicable sales charges, including contingent
deferred sales charges.
4 This column reflects the impact, if any, of certain reimbursements/waivers
from Capital Research and Management Company. During the years shown, Capital
Research and Management Company reduced fees for investment advisory services.
5 Based on operations for the period shown and, accordingly, may not be
representative of a full year.
Fundamental Investors / Prospectus
36
<PAGE>
[Logo - American Funds /(R)/] The right choice for the long term/(R)/
FOR SHAREHOLDER SERVICES American Funds Service Company
800/421-0180
FOR RETIREMENT PLAN SERVICES Call your employer or plan
administrator
FOR ADVISER MARKETING American Funds Distributors
800/421-9900
FOR 529 PLANS American Funds Service Company
800 /421-0180, ext. 529
FOR 24-HOUR INFORMATION American FundsLine
800/325-3590
americanfunds.com
Telephone calls you have with the American Funds organization may be
monitored or recorded for quality assurance, verification and/or
recordkeeping purposes. By speaking with us on the telephone, you are
giving your consent to such monitoring and recording.
-----------------------------------------------------------------------------------
MULTIPLE TRANSLATIONS This prospectus may be translated into other languages.
If there is any inconsistency or ambiguity in the meaning of any translated word
or phrase, the English text will prevail.
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS The shareholder reports contain
additional information about the fund, including financial statements,
investment results, portfolio holdings, a discussion of market conditions and
the fund's investment strategies and the independent registered public
accounting firm's report (in the annual report).
PROGRAM DESCRIPTION The program description for the CollegeAmerica/(R)/ 529
program contains additional information about the policies and services related
to 529 plan accounts.
STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The current SAI,
as amended from time to time, contains more detailed information about the fund,
including the fund's financial statements, and is incorporated by reference into
this prospectus. This means that the current SAI, for legal purposes, is part of
this prospectus. The codes of ethics describe the personal investing policies
adopted by the fund, the fund's investment adviser and its affiliated companies.
The codes of ethics and current SAI are on file with the Securities and Exchange
Commission (SEC). These and other related materials about the fund are available
for review or to be copied at the SEC's Public Reference Room in Washington, DC
(202/551-8090) or on the EDGAR database on the SEC's website at sec.gov or,
after payment of a duplicating fee, via e-mail request to publicinfo@sec.gov or
by writing to the SEC's Public Reference Section, 100 F Street, NE, Washington,
DC 20549-0102. The codes of ethics, current SAI and shareholder reports are also
available, free of charge, on americanfunds.com.
E-DELIVERY AND HOUSEHOLD MAILINGS Each year you are automatically sent an
updated prospectus and annual and semi-annual reports for the fund. You may also
occasionally receive proxy statements for the fund. In order to reduce the
volume of mail you receive, when possible, only one copy of these documents will
be sent to shareholders who are part of the same family and share the same
household address. You may elect to receive these documents electronically in
lieu of paper form by enrolling in e-delivery on our website, americanfunds.com.
If you would like to opt out of household-based mailings or receive a
complimentary copy of the current SAI, codes of ethics, annual/semi-annual
report to shareholders or applicable program description, please call American
Funds Service Company at 800/421-0180 or write to the secretary of the fund at
P.O. Box 7650, San Francisco, California 94120.
SECURITIES INVESTOR PROTECTION CORPORATION (SIPC) Shareholders may obtain
information about SIPC on its website at sipc.org or by calling 202/371-8300.
Investment Company File No. 811-00032
MFGEPR-910-0309P Litho in USA CGD/B/8008
---------------------------------------------------------------------------------------------------------------------------------------
THE CAPITAL GROUP COMPANIES
American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust
<PAGE>
[Logo - American Funds/(R)/] The right choice for the long term/(R)/
Fundamental Investors/SM/
PROSPECTUS
ADDENDUM
March 1, 2009
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF
THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
Class R-5 shares of Fundamental Investors are available to certain clients of
the Personal Investment Management group of Capital Guardian Trust Company./SM/
Accordingly, for these shareholders, the following information should be read
in conjunction with the prospectus for this fund.
Risk/Return summary -- pages 1-4
INVESTMENT RESULTS
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2008:
1 YEAR 5 YEARS LIFETIME/*/
-----------------------------------------------------------------------
CLASS R-5 -- FIRST SOLD 5/15/02
Before taxes -39.53% 1.00% 1.94%
* Lifetime results are measured from the date the share class was first sold.
Fees and expenses of the fund -- pages 5-6
These tables describe the fees and expenses that you may pay if you buy and hold
shares of the fund.
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS R-5
-------------------------------------------------------------------------------
Maximum initial sales charge on purchases (as a percentage of none
offering price)
-------------------------------------------------------------------------------
Maximum sales charge on reinvested dividends none
-------------------------------------------------------------------------------
Maximum contingent deferred sales charge none
-------------------------------------------------------------------------------
Redemption or exchange fees none
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
CLASS R-5
--------------------------------------------------------------
Management fees/1/ 0.25%
--------------------------------------------------------------
Distribution and/or service (12b-1) fees none
--------------------------------------------------------------
Other expenses/2/ 0.12
--------------------------------------------------------------
Total annual fund operating expenses/1/ 0.37
1 The fund's investment adviser waived a portion of its management fees from
September 1, 2004, through December 31, 2008. Management fees and total annual
fund operating expenses in the table do not reflect any waiver. Information
regarding the effect of any waiver on total annual fund operating expenses can
be found in the Financial Highlights table in this prospectus addendum and in
the fund's annual report.
2 Includes custodial, legal, transfer agent and subtransfer agent/recordkeeping
payments and various other expenses. A portion of the fund's expenses may be
used to pay third parties (including affiliates of the fund's investment
adviser) that provide recordkeeping services to retirement plans invested in
the fund.
<PAGE>
EXAMPLE
The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect the impact of any fee waivers
or expense reimbursements.
Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------
Class R-5 $38 $119 $208 $468
-------------------------------------------------------------
Purchase and exchange of shares -- pages 18-23
PURCHASE OF CLASS R-5 SHARES
Class R-5 shares of the fund are available to certain clients of the Personal
Investment Management group of Capital Guardian Trust Company. Please contact
Capital Guardian Trust Company if you wish to purchase Class R-5 shares of the
fund.
Sales charges -- pages 23-26
CLASS R-5 SHARES
Class R-5 shares are sold without any initial or contingent deferred sales
charge. In addition, no compensation is paid to investment dealers on sales of
Class R-5 shares.
<PAGE>
Financial highlights -- pages 34-36
The Financial Highlights table is intended to help you understand the fund's
results for the past five fiscal years. Certain information reflects financial
results for a single share. The total returns in the table represent the rate
that an investor would have earned or lost on an investment in the fund
(assuming reinvestment of all dividends and capital gain distributions). Where
indicated, figures in the table reflect the impact, if any, of certain
reimbursements/waivers from Capital Research and Management Company. For more
information about these reimbursements/waivers, see the footnotes to the Annual
Fund Operating Expenses table under "Fees and expenses of the fund" in this
prospectus addendum and the fund's annual report. The information in the
Financial Highlights table has been audited by Deloitte & Touche LLP, whose
report, along with the fund's financial statements, is included in the statement
of additional information, which is available upon request.
(LOSS) INCOME FROM INVESTMENT OPERATIONS/1/
Net (losses)
gains on
Net securities
asset (both
value, Net realized Total from
beginning investment and investment
of year income/2/ unrealized) operations
----------------------------------------------------------------------------------
CLASS R-5:
Year ended 12/31/2008 $42.46 $ .69 $(17.23) $(16.54)
Year ended 12/31/2007 40.06 1.18 4.34 5.52
Year ended 12/31/2006 35.41 .71 6.16 6.87
Year ended 12/31/2005 32.26 .65 3.17 3.82
Year ended 12/31/2004 28.86 .68 3.35 4.03
DIVIDENDS AND DISTRIBUTIONS
Dividends Distributions Total Net asset
(from net (from dividends value,
investment capital and end of Total
income) gains) distributions year return/3/
----------------------------------------------------------------------------------------
CLASS R-5:
Year ended 12/31/2008 $ (.67) $ (.26) $ (.93) $24.99 (39.53)%
Year ended 12/31/2007 (1.05) (2.07) (3.12) 42.46 13.81
Year ended 12/31/2006 (.65) (1.57) (2.22) 40.06 19.50
Year ended 12/31/2005 (.67) -- (.67) 35.41 11.94
Year ended 12/31/2004 (.63) -- (.63) 32.26 14.19
Ratio of Ratio of
expenses expenses
to to
average average Ratio
Net net net of net
assets, assets assets income
end of before after to
year reim- reim- average
(in bursements/ bursements/ net
millions) waivers waivers/3/ assets/2,3/
--------------------------------------------------------------------------
CLASS R-5:
Year ended 12/31/2008 $1,077 .37% .35% 1.98%
Year ended 12/31/2007 1,014 .37 .34 2.73
Year ended 12/31/2006 481 .38 .35 1.83
Year ended 12/31/2005 265 .39 .36 1.96
Year ended 12/31/2004 141 .39 .39 2.31
YEAR ENDED DECEMBER 31
2008 2007 2006 2005 2004
------------------------------------------------------------------------------------
PORTFOLIO TURNOVER
RATE FOR ALL CLASSES 29% 27% 21% 24% 30%
OF SHARES
1 Based on average shares outstanding.
2 For the year ended December 31, 2007, this column reflects the impact of a
corporate action event that resulted in a one-time increase to net investment
income. If the corporate action had not occurred, the Class A net investment
income per share and ratio of net income to average net assets would have been
lower by $0.39 and 0.90%, respectively. The impact to the other share classes
would have been approximately the same.
3 This column reflects the impact, if any, of certain reimbursements/waivers
from Capital Research and Management Company. During the years shown, Capital
Research and Management Company reduced fees for investment advisory services.
<PAGE>
FUNDAMENTAL INVESTORS, INC.
Part B
Statement of Additional Information
March 1, 2009
This document is not a prospectus but should be read in conjunction with the
current prospectus or retirement plan prospectus of Fundamental Investors, Inc.
(the "fund" or "FI") dated March 1, 2009. You may obtain a prospectus from your
financial adviser or by writing to the fund at the following address:
Fundamental Investors, Inc.
Attention: Secretary
One Market
Steuart Tower, Suite 1800
San Francisco, California 94105
415/421-9360
Certain privileges and/or services described below may not be available to all
shareholders (including shareholders who purchase shares at net asset value
through eligible retirement plans) depending on the shareholder's investment
dealer or retirement plan recordkeeper. Please see your financial adviser,
investment dealer, plan recordkeeper or employer for more information.
TABLE OF CONTENTS
Item Page no.
---- --------
Certain investment limitations and guidelines . . . . . . . . . . . 2
Description of certain securities and investment techniques . . . . 2
Fundamental policies and investment restrictions. . . . . . . . . . 6
Management of the fund . . . . . . . . . . . . . . . . . . . . . . 9
Execution of portfolio transactions . . . . . . . . . . . . . . . . 29
Disclosure of portfolio holdings. . . . . . . . . . . . . . . . . . 31
Price of shares . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Taxes and distributions . . . . . . . . . . . . . . . . . . . . . . 35
Purchase and exchange of shares . . . . . . . . . . . . . . . . . . 40
Sales charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Sales charge reductions and waivers . . . . . . . . . . . . . . . . 47
Selling shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Shareholder account services and privileges . . . . . . . . . . . . 52
General information . . . . . . . . . . . . . . . . . . . . . . . . 55
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Financial statements
Fundamental Investors -- Page 1
<PAGE>
CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES
The following limitations and guidelines are considered at the time of purchase,
under normal circumstances, and are based on a percentage of the fund's net
assets unless otherwise noted. This summary is not intended to reflect all of
the fund's investment limitations.
DEBT SECURITIES
. The fund may invest up to 5% of its assets in straight debt securities
(i.e, not convertible into equity) rated Ba1 or below by Moody's Investors
Service ("Moody's") and BB+ or below by Standard & Poor's Corporation
("S&P") or unrated but determined to be of equivalent quality.
INVESTING OUTSIDE THE U.S.
. The fund may invest up to 30% of its assets in securities of issuers that
are domiciled outside the United States and Canada and not included in the
S&P 500 Composite Index. In determining the domicile of an issuer, the
fund's investment adviser will consider the domicile determination of a
leading provider of global indexes, such as Morgan Stanley Capital
International, and may also take into account such factors as where the
company is legally organized and/or maintains principal corporate offices
and/or conducts its principal operations.
* * * * * *
The fund may experience difficulty liquidating certain portfolio securities
during significant market declines or periods of heavy redemptions.
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
The descriptions below are intended to supplement the material in the prospectus
under "Investment objective, strategies and risks."
EQUITY SECURITIES -- Equity securities represent an ownership position in a
company. Equity securities held by the fund typically consist of common stocks.
The prices of equity securities fluctuate based on, among other things, events
specific to their issuers and market, economic and other conditions. For
example, prices of these securities can be affected by financial contracts held
by the issuer or third parties (such as derivatives) relating to the security or
other assets or indices.
There may be little trading in the secondary market for particular equity
securities, which may adversely affect the fund's ability to value accurately or
dispose of such equity securities. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the value and/or
liquidity of equity securities.
The growth-oriented, equity-type securities generally purchased by the fund may
involve large price swings and potential for loss.
DEBT SECURITIES -- Debt securities are used by issuers to borrow money.
Generally, issuers pay investors periodic interest and repay the amount borrowed
either periodically during the life of the
Fundamental Investors -- Page 2
<PAGE>
security and/or at maturity. Some debt securities, such as zero coupon bonds, do
not pay current interest, but are purchased at a discount from their face values
and their values accrete over time to face value at maturity. The market prices
of debt securities fluctuate depending on such factors as interest rates, credit
quality and maturity. In general, market prices of debt securities decline when
interest rates rise and increase when interest rates fall. For example, prices
of these securities can be affected by financial contracts held by the issuer or
third parties (such as derivatives) relating to the security or other assets or
indices.
Lower rated debt securities, rated Ba1 or below by Moody's and/or BB+ or below
by S&P or unrated but determined by the fund's investment adviser to be of
equivalent quality, are described by the rating agencies as speculative and
involve greater risk of default or price changes due to changes in the issuer's
creditworthiness than higher rated debt securities, or they may already be in
default. The market prices of these securities may fluctuate more than higher
quality securities and may decline significantly in periods of general economic
difficulty. It may be more difficult to dispose of, and to determine the value
of, lower rated debt securities.
Credit ratings for debt securities provided by rating agencies reflect an
evaluation of the safety of principal and interest payments, not market value
risk. The rating of an issuer is a rating agency's view of past and future
potential developments related to the issuer and may not necessarily reflect
actual outcomes. There can be a lag between the time of developments relating to
an issuer and the time a rating is assigned and updated.
Bond rating agencies may assign modifiers (such as +/-) to ratings categories to
signify the relative position of a credit within the rating category. Investment
policies that are based on ratings categories should be read to include any
security within that category, without giving consideration to the modifier
except where otherwise provided. See the Appendix for more information about
credit ratings.
SECURITIES WITH EQUITY AND DEBT CHARACTERISTICS -- The fund may invest in
securities that have a combination of equity and debt characteristics. These
securities may at times behave more like equity than debt or vice versa. Some
types of convertible bonds, preferred stocks or other preferred securities
automatically convert into common stocks or other securities at a stated
conversion ratio and some may be subject to redemption at the option of the
issuer at a predetermined price. These securities, prior to conversion, may pay
a fixed rate of interest or a dividend. Because convertible securities have both
debt and equity characteristics, their values vary in response to many factors,
including the values of the securities into which they are convertible, general
market and economic conditions, and convertible market valuations, as well as
changes in interest rates, credit spreads and the credit quality of the issuer.
The prices and yields of nonconvertible preferred securities or preferred stocks
generally move with changes in interest rates and the issuer's credit quality,
similar to the factors affecting debt securities. Nonconvertible preferred
securities will be treated as debt for fund investment limit purposes.
REAL ESTATE INVESTMENT TRUSTS -- The fund may invest in securities issued by
real estate investment trusts (REITs), which primarily invest in real estate or
real estate-related loans. Equity REITs own real estate properties, while
mortgage REITs hold construction, development and/or long-term mortgage loans.
The values of REITs may be affected by changes in the value of the underlying
property of the trusts, the creditworthiness of the issuer, property taxes,
interest rates, tax laws and regulatory requirements, such as those relating to
the environment. Both types of
Fundamental Investors -- Page 3
<PAGE>
REITs are dependent upon management skill and the cash flows generated by their
holdings, the real estate market in general and the possibility of failing to
qualify for any applicable pass-through tax treatment or failing to maintain any
applicable exemptive status afforded under relevant laws.
INVESTING IN VARIOUS COUNTRIES -- Investing outside the United States may
involve additional risks caused by, among other things, currency controls and
fluctuating currency values; different accounting, auditing, financial reporting
and legal standards and practices in some countries; changing local, regional
and global economic, political and social conditions; expropriation; changes in
tax policy; greater market volatility; differing securities market structures;
higher transaction costs; and various administrative difficulties, such as
delays in clearing and settling portfolio transactions or in receiving payment
of dividends.
The risks described above may be heightened in connection with investments in
developing countries. Although there is no universally accepted definition, the
investment adviser generally considers a developing country as a country that is
in the earlier stages of its industrialization cycle with a low per capita gross
domestic product ("GDP") and a low market capitalization to GDP ratio relative
to those in the United States and the European Union. Historically, the markets
of developing countries have been more volatile than the markets of developed
countries. The fund may invest in securities of issuers in developing countries
only to a limited extent.
Additional costs could be incurred in connection with the fund's investment
activities outside the United States. Brokerage commissions may be higher
outside the United States, and the fund will bear certain expenses in connection
with its currency transactions. Furthermore, increased custodian costs may be
associated with maintaining assets in certain jurisdictions.
CURRENCY TRANSACTIONS -- The fund may purchase and sell currencies to facilitate
securities transactions and enter into forward currency contracts to protect
against changes in currency exchange rates. A forward currency contract is an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. Forward currency contracts
entered into by the fund will involve the purchase or sale of one currency
against the U.S. dollar. While entering into forward currency transactions could
minimize the risk of loss due to a decline in the value of the hedged currency,
it could also limit any potential gain that may result from an increase in the
value of the currency. The fund will not generally attempt to protect against
all potential changes in exchange rates. The fund will segregate liquid assets
that will be marked to market daily to meet its forward contract commitments to
the extent required by the Securities and Exchange Commission.
Certain provisions of the Internal Revenue Code may affect the extent to which
the fund may enter into forward contracts. Such transactions also may affect the
character and timing of income, gain or loss recognized by the fund for U.S.
federal income tax purposes.
INVESTING IN SMALLER CAPITALIZATION STOCKS -- The fund may invest in the stocks
of smaller capitalization companies (typically companies with market
capitalizations of less than $3.5 billion at the time of purchase). The
investment adviser believes that the issuers of smaller capitalization stocks
often provide attractive investment opportunities. However, investing in smaller
capitalization stocks can involve greater risk than is customarily associated
with investing in stocks of larger, more established companies. For example,
smaller companies often have limited product lines, limited operating histories,
limited markets or financial resources, may be
Fundamental Investors -- Page 4
<PAGE>
dependent on one or a few key persons for management and can be more susceptible
to losses. Also, their securities may be thinly traded (and therefore have to be
sold at a discount from current prices or sold in small lots over an extended
period of time), may be followed by fewer investment research analysts and may
be subject to wider price swings, thus creating a greater chance of loss than
securities of larger capitalization companies.
OBLIGATIONS BACKED BY THE "FULL FAITH AND CREDIT" OF THE U.S. GOVERNMENT -- U.S.
government obligations include the following types of securities:
U.S. TREASURY SECURITIES -- U.S. Treasury securities include direct
obligations of the U.S. Treasury, such as Treasury bills, notes and bonds.
For these securities, the payment of principal and interest is
unconditionally guaranteed by the U.S. government, and thus they are of the
highest possible credit quality. Such securities are subject to variations
in market value due to fluctuations in interest rates, but, if held to
maturity, will be paid in full.
FEDERAL AGENCY SECURITIES -- The securities of certain U.S. government
agencies and government-sponsored entities are guaranteed as to the timely
payment of principal and interest by the full faith and credit of the U.S.
government. Such agencies and entities include the Government National
Mortgage Association (Ginnie Mae), the Veterans Administration (VA), the
Federal Housing Administration (FHA), the Export-Import Bank (Exim Bank),
the Overseas Private Investment Corporation (OPIC), the Commodity Credit
Corporation (CCC) and the Small Business Administration (SBA).
OTHER FEDERAL AGENCY OBLIGATIONS -- Additional federal agency securities are
neither direct obligations of, nor guaranteed by, the U.S. government. These
obligations include securities issued by certain U.S. government agencies and
government-sponsored entities. However, they generally involve some form of
federal sponsorship: some operate under a government charter; some are backed by
specific types of collateral; some are supported by the issuer's right to borrow
from the Treasury; and others are supported only by the credit of the issuing
government agency or entity. These agencies and entities include, but are not
limited to: Federal Home Loan Bank, Federal Home Loan Mortgage Corporation
(Freddie Mac), Federal National Mortgage Association (Fannie Mae), Tennessee
Valley Authority and Federal Farm Credit Bank System.
On September 7, 2008, Freddie Mac and Fannie Mae were placed into
conservatorship by their new regulator, the Federal Housing Finance Agency.
Simultaneously, the U.S. Treasury made a commitment of indefinite duration to
maintain the positive net worth of both firms.
CASH AND CASH EQUIVALENTS -- The fund may hold cash or invest in cash
equivalents. Cash equivalents include (a) commercial paper (for example,
short-term notes with maturities typically up to 12 months in length issued by
corporations, governmental bodies or bank/corporation sponsored conduits
(asset-backed commercial paper)) (b) short-term bank obligations (for example,
certificates of deposit, bankers' acceptances (time drafts on a commercial bank
where the bank accepts an irrevocable obligation to pay at maturity)) or bank
notes, (c) savings association and savings bank obligations (for example, bank
notes and certificates of deposit issued by savings banks or savings
associations), (d) securities of the U.S. government, its agencies or
instrumentalities that mature, or may be redeemed, in one year or less, and (e)
corporate bonds and notes that mature, or that may be redeemed, in one year or
less.
REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements under
which the fund buys a security and obtains a simultaneous commitment from the
seller to repurchase the
Fundamental Investors -- Page 5
<PAGE>
security at a specified time and price. Repurchase agreements permit the fund to
maintain liquidity and earn income over periods of time as short as overnight.
The seller must maintain with the fund's custodian collateral equal to at least
100% of the repurchase price, including accrued interest, as monitored daily by
the investment adviser. The fund will only enter into repurchase agreements
involving securities in which it could otherwise invest and with selected banks
and securities dealers whose financial condition is monitored by the investment
adviser. If the seller under the repurchase agreement defaults, the fund may
incur a loss if the value of the collateral securing the repurchase agreement
has declined and may incur disposition costs in connection with liquidating the
collateral. If bankruptcy proceedings are commenced with respect to the seller,
realization of the collateral by the fund may be delayed or limited.
RESTRICTED OR ILLIQUID SECURITIES -- The fund may purchase securities subject to
restrictions on resale. Restricted securities may only be sold pursuant to an
exemption from registration under the Securities Act of 1933 (the "1933 Act"),
or in a registered public offering. Where registration is required, the holder
of a registered security may be obligated to pay all or part of the registration
expense and a considerable period may elapse between the time it decides to seek
registration and the time it may be permitted to sell a security under an
effective registration statement. Difficulty in selling such securities may
result in a loss to the fund or cause it to incur additional administrative
costs.
Securities (including restricted securities) not actively traded will be
considered illiquid unless they have been specifically determined to be liquid
under procedures adopted by the fund's board of directors, taking into account
factors such as the frequency and volume of trading, the commitment of dealers
to make markets and the availability of qualified investors, all of which can
change from time to time. The fund may incur certain additional costs in
disposing of illiquid securities.
* * * * * *
PORTFOLIO TURNOVER -- Portfolio changes will be made without regard to the
length of time particular investments may have been held. Short-term trading
profits are not the fund's objective, and changes in its investments are
generally accomplished gradually, though short-term transactions may
occasionally be made. High portfolio turnover involves correspondingly greater
transaction costs in the form of dealer spreads or brokerage commissions, and
may result in the realization of net capital gains, which are taxable when
distributed to shareholders.
The fund's portfolio turnover rates for the fiscal years ended December 31, 2008
and 2007 were 29% and 27%, respectively. The portfolio turnover rate would equal
100% if each security in a fund's portfolio were replaced once per year. See
"Financial highlights" in the prospectus for the fund's annual portfolio
turnover rate for each of the last five fiscal years.
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
FUNDAMENTAL POLICIES -- The fund has adopted the following fundamental policies
and investment restrictions, which may not be changed without approval by
holders of a majority of its outstanding shares. Such majority is defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), as the vote of the
lesser of (a) 67% or more of the outstanding voting securities present at a
shareholder meeting, if the holders of more than 50% of the outstanding voting
securities are present in person or by proxy, or (b) more than 50% of the
outstanding voting securities. All percentage limitations are considered at the
time securities are purchased
Fundamental Investors -- Page 6
<PAGE>
and are based on the fund's net assets unless otherwise indicated. None of the
following investment restrictions involving a maximum percentage of assets will
be considered violated unless the excess occurs immediately after, and is caused
by, an acquisition by the fund.
The fund may not:
1. borrow money or securities;
2. buy securities "on margin";
3. effect "short sales" of securities;
4. mortgage, pledge or hypothecate securities;
5. lend money or securities (but the purchase of a portion of an issue of
publicly distributed debt securities is not considered the making of a loan);
6. invest in the securities of any issuer which, including predecessors, has
a record of less than three years continuous operation;
7. invest in the securities of any issuer if any officer or director of the
fund owns more than 1/2 of 1% of the securities of that issuer or if the fund's
officers and directors together own more than 5% of the securities of that
issuer;
8. invest any of its assets in the securities of any managed investment trust
or of any other managed investment company;
9. invest more than 5% of its total assets at the market value at the time of
investment in securities of any one issuer, or hold more than 10% of such
securities of any one issuer, but these limitations do not apply to obligations
of or guaranteed by the U.S.;
10. purchase or sell real estate (this shall not prevent the fund from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business);
11. purchase or sell commodities or commodity contracts;
12. act as underwriter of securities issued by other persons;
13. make investments in other companies for the purpose of exercising control
or management;
14. concentrate its investments in any one industry or group of industries,
but may invest up to 25% of its assets in any one industry.
Notwithstanding investment restriction number 8, the fund may invest in
securities of other investment companies if deemed advisable by its officers in
connection with the administration of a deferred compensation plan adopted by
Directors pursuant to an exemptive order granted by the Securities and Exchange
Commission.
Fundamental Investors -- Page 7
<PAGE>
For purposes of investment restriction number 14, the fund will not invest 25%
or more (rather than more than 25%) of its total assets in the securities of
issuers in the same industry.
NONFUNDAMENTAL POLICIES -- The following policies may be changed without
shareholder approval.
1. The fund will not invest in puts or calls; or invest more than 10% of the
value of its total assets in securities which are not readily marketable
(including repurchase agreements maturing in more than seven days or securities
for which there is no active and substantial market).
2. No officer or director of the fund may sell portfolio securities to the
fund or buy portfolio securities from it.
3. The fund may not issue senior securities, except as permitted by the 1940
Act.
4. The fund may not acquire securities of open-end investment companies or
unit investment trusts registered under the 1940 Act in reliance on Sections
12(d)(1)(F) or 12(d)(1)(G) of the 1940 Act.
Fundamental Investors -- Page 8
<PAGE>
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS AND OFFICERS
"INDEPENDENT" DIRECTORS/1/
NAME, AGE AND NUMBER OF
POSITION WITH FUND PORTFOLIOS/3/
(YEAR FIRST ELECTED PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS/4/ HELD
AS A DIRECTOR/2/) DURING PAST FIVE YEARS BY DIRECTOR BY DIRECTOR
-----------------------------------------------------------------------------------------------------------------
Ronald P. Badie, 66 Retired; former Vice Chairman, 3 Amphenol Corporation;
Director (2008) Deutsche Bank Alex. Brown Merisel, Inc.; Nautilus, Inc.;
Obagi Medical Products, Inc.
-----------------------------------------------------------------------------------------------------------------
Joseph C. Berenato, 62 Chairman and CEO, Ducommun 6 Ducommun Incorporated
Director (2003) Incorporated (aerospace
components manufacturer)
-----------------------------------------------------------------------------------------------------------------
Louise H. Bryson, 64 Chair of the Board of 3 None
Director (2008) Trustees, J. Paul Getty Trust;
former President,
Distribution, Lifetime
Entertainment Network; former
Executive Vice President and
General Manager, Lifetime
Movie Network
-----------------------------------------------------------------------------------------------------------------
Robert J. Denison, 67 Chair, First Security 5 None
Director (2005) Management (private
investment)
-----------------------------------------------------------------------------------------------------------------
Robert A. Fox, 71 Managing General Partner, Fox 8 Chemtura Corporation
Director (1998) Investments LP; corporate
director; retired President
and CEO, Foster Farms (poultry
producer)
-----------------------------------------------------------------------------------------------------------------
Leonade D. Jones, 61 Co-founder, VentureThink LLC 7 None
Director (1998) (developed and managed
e-commerce businesses) and
Versura Inc. (education loan
exchange); former Treasurer,
The Washington Post Company
-----------------------------------------------------------------------------------------------------------------
John G. McDonald, 71 Stanford Investors Professor, 9 iStar Financial, Inc.;
Director (1998) Graduate School of Business, Plum Creek Timber Co.;
Stanford University Scholastic Corporation;
Varian, Inc.
-----------------------------------------------------------------------------------------------------------------
Gail L. Neale, 74 President, The Lovejoy 4 None
Director (1985) Consulting Group, Inc. (a pro
bono consulting group advising
nonprofit organizations)
-----------------------------------------------------------------------------------------------------------------
Henry E. Riggs, 74 President Emeritus, Keck 5 None
Chairman of the Board Graduate Institute of Applied
(Independent and Life Sciences
Non-Executive) (1989)
-----------------------------------------------------------------------------------------------------------------
Patricia K. Woolf, Ph.D., Private investor; corporate 7 None
74 director; former Lecturer,
Director (1998) Department of Molecular
Biology, Princeton University
-----------------------------------------------------------------------------------------------------------------
Fundamental Investors -- Page 9
<PAGE>
"INTERESTED" DIRECTORS/5,6/
PRINCIPAL OCCUPATION(S)
DURING PAST FIVE YEARS
NAME, AGE AND AND POSITIONS NUMBER OF
POSITION WITH FUND HELD WITH AFFILIATED ENTITIES PORTFOLIOS/3/
(YEAR FIRST ELECTED AS A OR THE PRINCIPAL UNDERWRITER OVERSEEN OTHER DIRECTORSHIPS/4/ HELD
DIRECTOR/OFFICER/2/) OF THE FUND BY DIRECTOR BY DIRECTOR
-------------------------------------------------------------------------------------------------------------
James F. Rothenberg, 62 Chairman of the Board, Capital 2 None
Research and Management
Company; Director and
Vice Chairman of the Board Non-Executive Chair, American
(1998) Funds Distributors, Inc.*;
Director and Non-Executive
Chair, The Capital Group
Companies, Inc.*
-------------------------------------------------------------------------------------------------------------
Dina N. Perry, 63 Senior Vice President - Capital 1 None
World Investors, Capital
Research and Management Company;
President (1994) Director, Capital Research and
Management Company
-------------------------------------------------------------------------------------------------------------
Fundamental Investors -- Page 10
<PAGE>
NAME, AGE AND
POSITION WITH FUND PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
(YEAR FIRST ELECTED AS AND POSITIONS HELD WITH AFFILIATED ENTITIES
AN OFFICER/2/) OR THE PRINCIPAL UNDERWRITER OF THE FUND
-------------------------------------------------------------------------------
Paul G. Haaga, Jr., Vice Chairman of the Board, Capital Research and
60 Management Company; Senior Vice President - Fixed
Income, Capital Research and Management Company
Executive Vice
President (1994)
-------------------------------------------------------------------------------
Michael T. Kerr, 49 Senior Vice President - Capital World Investors,
Capital Research and Management Company; Director,
Senior Vice President Capital Research and Management Company
(1995)
-------------------------------------------------------------------------------
Martin Romo,/6/ 41 Senior Vice President - Capital World Investors,
Capital Research Company*; Director and Co-President,
Senior Vice President Capital Research Company*; Director, The Capital
(1999) Group Companies, Inc.*
-------------------------------------------------------------------------------
Mark L. Casey,/6 /38 Vice President - Capital World Investors, Capital
Research Company*
Vice President (2008)
-------------------------------------------------------------------------------
Ronald B. Morrow, 63 Senior Vice President - Capital World Investors,
Capital Research and Management Company
Vice President (2004)
-------------------------------------------------------------------------------
Donald H. Rolfe, 36 Associate Counsel - Fund Business Management Group,
Capital Research and Management Company
Vice President (2007)
-------------------------------------------------------------------------------
Patrick F. Quan, 50 Vice President - Fund Business Management Group,
Capital Research and Management Company
Secretary (1989-1998;
2000)
-------------------------------------------------------------------------------
Jeffrey P. Regal, 37 Vice President - Fund Business Management Group,
Capital Research and Management Company
Treasurer (2006)
-------------------------------------------------------------------------------
Gregory F. Niland, 37 Vice President - Fund Business Management Group,
Capital Research and Management Company
Assistant Treasurer
(2009)
-------------------------------------------------------------------------------
Other officers/6/
* Company affiliated with Capital Research and Management Company.
1 The term "independent" director refers to a director who is not an "interested
person" of the fund within the meaning of the 1940 Act.
2 Directors and officers of the fund serve until their resignation, removal or
retirement.
3 Funds managed by Capital Research and Management Company, including the
American Funds; American Funds Insurance Series,(R) which is composed of 16
funds and serves as the underlying investment vehicle for certain variable
insurance contracts; American Funds Target Date Retirement Series,(R)/ /Inc.,
which is composed of nine funds and is available through tax-deferred
retirement plans and IRAs; and Endowments, which is composed of two portfolios
and is available to certain nonprofit organizations.
4 This includes all directorships (other than those in the American Funds or
other funds managed by Capital Research and Management Company) that are held
by each director as a director of a public company or a registered investment
company.
5 "Interested persons" of the fund within the meaning of the 1940 Act, on the
basis of their affiliation with the fund's investment adviser, Capital Research
and Management Company, or affiliated entities (including the fund's principal
underwriter).
6 All of the officers listed, except Mark L. Casey and Martin Romo, are officers
and/or directors/trustees of one or more of the other funds for which Capital
Research and Management Company serves as investment adviser.
THE ADDRESS FOR ALL DIRECTORS AND OFFICERS OF THE FUND IS 333 SOUTH HOPE STREET,
55TH FLOOR, LOS ANGELES, CALIFORNIA 90071, ATTENTION: SECRETARY.
Fundamental Investors -- Page 11
<PAGE>
FUND SHARES OWNED BY DIRECTORS AS OF DECEMBER 31, 2008:
AGGREGATE
DOLLAR
RANGE/1/ OF
INDEPENDENT
AGGREGATE DIRECTORS
DOLLAR RANGE/1/ DOLLAR DEFERRED
OF SHARES RANGE/1 /OF COMPENSATION/2/
OWNED IN INDEPENDENT ALLOCATED TO
ALL FUNDS DIRECTORS ALL FUNDS
IN THE DEFERRED WITHIN
DOLLAR RANGE/1/ AMERICAN FUNDS COMPENSATION/2/ AMERICAN FUNDS
OF FUND FAMILY OVERSEEN ALLOCATED FAMILY OVERSEEN
NAME SHARES OWNED BY DIRECTOR TO FUND BY DIRECTOR
-----------------------------------------------------------------------------------------
"INDEPENDENT" DIRECTORS
-----------------------------------------------------------------------------------------
Ronald P. Badie Over $100,000 Over $100,000 $10,001 - $10,001 - $50,000
$50,000
-----------------------------------------------------------------------------------------
Joseph C. $10,001 - Over $100,000 $50,001 - Over $100,000
Berenato $50,000 $100,000
-----------------------------------------------------------------------------------------
Louise H. Bryson $10,001 - Over $100,000 $10,001 - Over $100,000
$50,000 $50,000
-----------------------------------------------------------------------------------------
Robert J. Denison $10,001 - $10,001 - N/A N/A
$50,000 $50,000
-----------------------------------------------------------------------------------------
Robert A. Fox Over $100,000 Over $100,000 Over $100,000 Over $100,000
-----------------------------------------------------------------------------------------
Leonade D. Jones $50,001 - Over $100,000 Over $100,000 Over $100,000
$100,000
-----------------------------------------------------------------------------------------
John G. McDonald Over $100,000 Over $100,000 N/A N/A
-----------------------------------------------------------------------------------------
Gail L. Neale $10,001 - Over $100,000 N/A N/A
$50,000
-----------------------------------------------------------------------------------------
Henry E. Riggs Over $100,000 Over $100,000 Over $100,000 Over $100,000
-----------------------------------------------------------------------------------------
Patricia K. Woolf $10,001 - Over $100,000 Over $100,000 Over $100,000
$50,000
-----------------------------------------------------------------------------------------
Fundamental Investors -- Page 12
<PAGE>
AGGREGATE
DOLLAR RANGE/1/
OF SHARES
OWNED IN
ALL FUNDS
IN THE
DOLLAR RANGE/1/ AMERICAN FUNDS
OF FUND FAMILY OVERSEEN
NAME SHARES OWNED BY DIRECTOR
------------------------------------------------------------------------------
"INTERESTED" DIRECTORS
------------------------------------------------------------------------------
Dina N. Perry Over $100,000 Over $100,000
------------------------------------------------------------------------------
James F. Over $100,000 Over $100,000
Rothenberg
------------------------------------------------------------------------------
1 Ownership disclosure is made using the following ranges: None; $1 - $10,000;
$10,001 - $50,000; $50,001 - $100,000; and Over $100,000. The amounts listed
for "interested" directors include shares owned through The Capital Group
Companies, Inc. retirement plan and 401(k) plan.
2 Eligible directors may defer their compensation under a nonqualified deferred
compensation plan. Deferred amounts accumulate at an earnings rate determined
by the total return of one or more American Funds as designated by the
director.
DIRECTOR COMPENSATION -- No compensation is paid by the fund to any officer or
director who is a director, officer or employee of the investment adviser or its
affiliates. The boards of funds advised by the investment adviser typically meet
either individually or jointly with the boards of one or more other such funds
with substantially overlapping board membership (in each case referred to as a
"board cluster"). The fund typically pays each independent director an annual
fee, which ranges from $16,500 to $35,000, based primarily on the total number
of board clusters on which that independent director serves.
In addition, the fund generally pays independent directors attendance and other
fees for meetings of the board and its committees. Board and committee chairs
receive additional fees for their services.
Independent directors also receive attendance fees for certain special joint
meetings and information sessions with directors and trustees of other groupings
of funds advised by the investment adviser. The fund and the other funds served
by each independent director each pay an equal portion of these attendance fees.
No pension or retirement benefits are accrued as part of fund expenses.
Independent directors may elect, on a voluntary basis, to defer all or a portion
of their fees through a deferred compensation plan in effect for the fund. The
fund also reimburses certain expenses of the independent directors.
Fundamental Investors -- Page 13
<PAGE>
DIRECTOR COMPENSATION EARNED DURING THE FISCAL YEAR ENDED DECEMBER 31, 2008
TOTAL COMPENSATION
AGGREGATE COMPENSATION (INCLUDING
(INCLUDING VOLUNTARILY VOLUNTARILY DEFERRED
DEFERRED COMPENSATION/1/) COMPENSATION/1/)
NAME FROM THE FUND FROM ALL FUNDS MANAGED BY
CAPITAL RESEARCH AND
MANAGEMENT
COMPANY OR ITS
AFFILIATES/2/
------------------------------------------------------------------------------------------------------------------------------------
Ronald P. Badie/3,4/ $22,583 $ 67,000
------------------------------------------------------------------------------------------------------------------------------------
Joseph C. Berenato/3/ 53,667 310,500
------------------------------------------------------------------------------------------------------------------------------------
Louise H. Bryson/3,4/ 20,604 155,500
------------------------------------------------------------------------------------------------------------------------------------
Robert J. Denison/3/ 50,500 215,500
------------------------------------------------------------------------------------------------------------------------------------
Robert A. Fox/3/ 49,777 325,625
------------------------------------------------------------------------------------------------------------------------------------
Leonade D. Jones/3/ 49,643 380,597
------------------------------------------------------------------------------------------------------------------------------------
John G. McDonald/3/ 44,334 398,667
------------------------------------------------------------------------------------------------------------------------------------
Gail L. Neale 56,375 240,500
------------------------------------------------------------------------------------------------------------------------------------
Henry E. Riggs/3/ 75,250 287,840
------------------------------------------------------------------------------------------------------------------------------------
Patricia K. Woolf/3/ 51,178 364,569
------------------------------------------------------------------------------------------------------------------------------------
1 Amounts may be deferred by eligible directors under a nonqualified deferred
compensation plan adopted by the fund in 1993. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more American Funds
as designated by the directors. Compensation shown in this table for the fiscal
year ended December 31, 2008 does not include earnings on amounts deferred in
previous fiscal years. See footnote 3 to this table for more information.
2 Funds managed by Capital Research and Management Company, including the
American Funds; American Funds Insurance Series,(R) which is composed of 16
funds and serves as the underlying investment vehicle for certain variable
insurance contracts; American Funds Target Date Retirement Series,(R)/ /Inc.,
which is composed of nine funds and is available through tax-deferred
retirement plans and IRAs; and Endowments, which is composed of two portfolios
and is available to certain nonprofit organizations.
3 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the fund (plus earnings thereon) through the 2008
fiscal year for participating directors is as follows: Ronald P. Badie
($18,015), Joseph C. Berenato ($56,288), Louise H. Bryson ($16,942), Robert J.
Denison ($127,099), Robert A. Fox ($310,406), Leonade D. Jones ($92,496), John
G. McDonald ($425,372), Henry E. Riggs ($334,239) and Patricia K. Woolf
($223,667). Amounts deferred and accumulated earnings thereon are not funded
and are general unsecured liabilities of the fund until paid to the directors.
4 Ronald P. Badie and Louise H. Bryson were elected on August 7, 2008.
As of June 1, 2008, the officers and directors of the fund and their families,
as a group, owned beneficially or of record less than 1% of the outstanding
shares of the fund.
FUND ORGANIZATION AND THE BOARD OF DIRECTORS -- The fund, an open-end,
diversified management investment company, was organized as a Delaware
corporation on October 17, 1932 and reincorporated in Maryland on February 1,
1990. Although the board of directors has delegated day-to-day oversight to the
investment adviser, all fund operations are supervised by the fund's board,
which meets periodically and performs duties required by applicable state and
federal laws.
Under Maryland law, the business affairs of a fund are managed under the
direction of the board of directors, and all powers of the fund are exercised by
or under the authority of the board except as reserved to the shareholders by
law or the fund's charter or by-laws. Maryland law requires each director to
perform his/her duties as a director, including his/her duties as a
Fundamental Investors -- Page 14
<PAGE>
member of any board committee on which he/she serves, in good faith, in a manner
he/she reasonably believes to be in the best interest of the fund, and with the
care that an ordinarily prudent person in a like position would use under
similar circumstances.
Independent board members are paid certain fees for services rendered to the
fund as described above. They may elect to defer all or a portion of these fees
through a deferred compensation plan in effect for the fund.
The fund has several different classes of shares. Shares of each class represent
an interest in the same investment portfolio. Each class has pro rata rights as
to voting, redemption, dividends and liquidation, except that each class bears
different distribution expenses and may bear different transfer agent fees and
other expenses properly attributable to the particular class as approved by the
board of directors and set forth in the fund's rule 18f-3 Plan. Each class'
shareholders have exclusive voting rights with respect to the respective class'
rule 12b-1 plans adopted in connection with the distribution of shares and on
other matters in which the interests of one class are different from interests
in another class. Shares of all classes of the fund vote together on matters
that affect all classes in substantially the same manner. Each class votes as a
class on matters that affect that class alone. Note that 529 college savings
plan account owners invested in Class 529 shares are not shareholders of the
fund and, accordingly, do not have the rights of a shareholder, such as the
right to vote proxies relating to fund shares. As the legal owner of the fund's
Class 529 shares, the Virginia College Savings Plan/SM/ will vote any proxies
relating to such fund shares.
The fund does not hold annual meetings of shareholders. However, significant
matters that require shareholder approval, such as certain elections of board
members or a change in a fundamental investment policy, will be presented to
shareholders at a meeting called for such purpose. Shareholders have one vote
per share owned. At the request of the holders of at least 10% of the shares,
the fund will hold a meeting at which any member of the board could be removed
by a majority vote.
The fund's articles of incorporation and by-laws as well as separate
indemnification agreements that the fund has entered into with independent
directors provide in effect that, subject to certain conditions, the fund will
indemnify its officers and directors against liabilities or expenses actually
and reasonably incurred by them relating to their service to the fund. However,
directors are not protected from liability by reason of their willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of their office.
COMMITTEES OF THE BOARD OF DIRECTORS -- The fund has an audit committee
comprised of Ronald P. Badie, Joseph C. Berenato, Robert J. Denison, Robert A.
Fox and Leonade D. Jones, none of whom is an "interested person" of the fund
within the meaning of the 1940 Act. The committee provides oversight regarding
the fund's accounting and financial reporting policies and practices, its
internal controls and the internal controls of the fund's principal service
providers. The committee acts as a liaison between the fund's independent
registered public accounting firm and the full board of directors. Four audit
committee meetings were held during the 2008 fiscal year.
The fund has a contracts committee, comprised of Ronald P. Badie, Joseph C.
Berenato, Louise H. Bryson, Robert J. Denison, Robert A. Fox, Leonade D. Jones,
John G. McDonald, Gail L. Neale, Henry E. Riggs and Patricia K. Woolf, none of
whom is an "interested person" of the fund within the meaning of the 1940 Act.
The committee's principal function is to request,
Fundamental Investors -- Page 15
<PAGE>
review and consider the information deemed necessary to evaluate the terms of
certain agreements between the fund and its investment adviser or the investment
adviser's affiliates, such as the Investment Advisory and Service Agreement,
Principal Underwriting Agreement, Administrative Services Agreement and Plans of
Distribution adopted pursuant to rule 12b-1 under the 1940 Act, that the fund
may enter into, renew or continue, and to make its recommendations to the full
board of directors on these matters. One contracts committee meeting was held
during the 2008 fiscal year.
The fund has a nominating and governance committee, comprised of Joseph C.
Berenato, Louise H. Bryson, John G. McDonald, Gail L. Neale and Patricia K.
Woolf, none of whom is an "interested person" of the fund within the meaning of
the 1940 Act. The committee periodically reviews such issues as the board's
composition, responsibilities, committees, compensation and other relevant
issues, and recommends any appropriate changes to the full board of directors.
The committee also evaluates, selects and nominates independent director
candidates to the full board of directors. While the committee normally is able
to identify from its own and other resources an ample number of qualified
candidates, it will consider shareholder suggestions of persons to be considered
as nominees to fill future vacancies on the board. Such suggestions must be sent
in writing to the nominating and governance committee, of the fund, addressed to
the fund's secretary, and must be accompanied by complete biographical and
occupational data on the prospective nominee, along with a written consent of
the prospective nominee for consideration of his or her name by the committee.
Three nominating committee meetings were held during the 2008 fiscal year.
The fund has a proxy committee comprised of Robert A. Fox, Leonade D. Jones,
John G. McDonald, Gail L. Neale and Patricia K. Woolf, none of whom is an
"interested person" of the fund within the meaning of the 1940 Act. The
committee's functions include establishing and reviewing procedures and policies
for voting proxies of companies held in the fund's portfolio, making
determinations with regard to certain contested proxy voting issues, and
discussing related current issues. Four proxy committee meetings were held
during the 2008 fiscal year.
PROXY VOTING PROCEDURES AND PRINCIPLES -- The fund and its investment adviser
have adopted Proxy Voting Procedures and Principles (the "Principles") with
respect to voting proxies of securities held by the fund, other American Funds,
Endowments and American Funds Insurance Series. The complete text of these
principles is available on the American Funds website at americanfunds.com.
Certain American Funds, including the fund, have established separate proxy
voting committees that vote proxies or delegate to a voting officer the
authority to vote on behalf of those funds. Proxies for all other funds are
voted by a committee of the appropriate equity investment division of the
investment adviser under authority delegated by those funds' boards. Therefore,
if more than one fund invests in the same company, they may vote differently on
the same proposal.
All U.S. proxies are voted. Proxies for companies outside the U.S. also are
voted, provided there is sufficient time and information available. After a
proxy statement is received, the investment adviser prepares a summary of the
proposals contained in the proxy statement. A discussion of any potential
conflicts of interest also is included in the summary. For proxies of securities
managed by a particular investment division of the investment adviser, the
initial voting recommendation is made by one or more of the division's
investment analysts familiar with the company and industry. A second
recommendation is made by a proxy coordinator (an investment analyst with
experience in corporate governance and proxy voting matters) within the
appropriate
Fundamental Investors -- Page 16
<PAGE>
investment division, based on knowledge of these Principles and familiarity with
proxy-related issues. The proxy summary and voting recommendations are made
available to the appropriate proxy voting committee for a final voting decision.
The analyst and proxy coordinator making voting recommendations are responsible
for noting any potential material conflicts of interest. One example might be
where a director of one or more American Funds is also a director of a company
whose proxy is being voted. In such instances, proxy voting committee members
are alerted to the potential conflict. The proxy voting committee may then elect
to vote the proxy or seek a third-party recommendation or vote of an ad hoc
group of committee members.
The Principles, which have been in effect in substantially their current form
for many years, provide an important framework for analysis and decision-making
by all funds. However, they are not exhaustive and do not address all potential
issues. The Principles provide a certain amount of flexibility so that all
relevant facts and circumstances can be considered in connection with every
vote. As a result, each proxy received is voted on a case-by-case basis
considering the specific circumstances of each proposal. The voting process
reflects the funds' understanding of the company's business, its management and
its relationship with shareholders over time.
Information regarding how the fund voted proxies relating to portfolio
securities during the 12-month period ended June 30 of each year will be
available on or about September 1 of each year (a) without charge, upon request
by calling American Funds Service Company at 800/421-0180, (b) on the American
Funds website and (c) on the SEC's website at sec.gov.
The following summary sets forth the general positions of the American Funds,
Endowments, American Funds Insurance Series and the investment adviser on
various proposals. A copy of the full Principles is available upon request, free
of charge, by calling American Funds Service Company or visiting the American
Funds website.
DIRECTOR MATTERS -- The election of a company's slate of nominees for
director generally is supported. Votes may be withheld for some or all of
the nominees if this is determined to be in the best interest of
shareholders. Separation of the chairman and CEO positions also may be
supported.
GOVERNANCE PROVISIONS -- Typically, proposals to declassify a board (elect
all directors annually) are supported based on the belief that this
increases the directors' sense of accountability to shareholders. Proposals
for cumulative voting generally are supported in order to promote
management and board accountability and an opportunity for leadership
change. Proposals designed to make director elections more meaningful,
either by requiring a majority vote or by requiring any director receiving
more withhold votes than affirmative votes to tender his or her
resignation, generally are supported.
SHAREHOLDER RIGHTS -- Proposals to repeal an existing poison pill generally
are supported. (There may be certain circumstances, however, when a proxy
voting committee of a fund or an investment division of the investment
adviser believes that a company needs to maintain anti-takeover
protection.) Proposals to eliminate the right of shareholders to act by
written consent or to take away a shareholder's right to call a special
meeting typically are not supported.
Fundamental Investors -- Page 17
<PAGE>
COMPENSATION AND BENEFIT PLANS -- Option plans are complicated, and many
factors are considered in evaluating a plan. Each plan is evaluated based
on protecting shareholder interests and a knowledge of the company and its
management. Considerations include the pricing (or repricing) of options
awarded under the plan and the impact of dilution on existing shareholders
from past and future equity awards. Compensation packages should be
structured to attract, motivate and retain existing employees and qualified
directors; however, they should not be excessive.
ROUTINE MATTERS -- The ratification of auditors, procedural matters
relating to the annual meeting and changes to company name are examples of
items considered routine. Such items generally are voted in favor of
management's recommendations unless circumstances indicate otherwise.
PRINCIPAL FUND SHAREHOLDERS -- The following table identifies those investors
who own of record or are known by the fund to own beneficially 5% or more of any
class of its shares as of the opening of business on June 1, 2008. Unless
otherwise indicated, the ownership percentages below represent ownership of
record rather than beneficial ownership.
NAME AND ADDRESS OWNERSHIP OWNERSHIP PERCENTAGE
-------------------------------------------------------------------------------
Edward D. Jones & Co. Record Class A 26.35%
Omnibus Account Class B 16.67
Maryland Heights, MO
-------------------------------------------------------------------------------
First Clearing, LLC Record Class B 5.09
Custody Account Class C 5.18
Glen Allen, VA
-------------------------------------------------------------------------------
Citigroup Global Markets, Inc. Record Class C 17.01
Omnibus Account Class F-1 25.84
New York, NY
-------------------------------------------------------------------------------
Merrill Lynch Record Class C 10.74
Omnibus Account
Jacksonville, FL
-------------------------------------------------------------------------------
A G Edwards & Sons, Inc. Record Class C 5.08
Omnibus Account
Saint Louis, MO
-------------------------------------------------------------------------------
LPL Financial Record Class F-1 10.99
Omnibus Account Class F-2 27.37
San Diego, CA
-------------------------------------------------------------------------------
Charles Schwab & Co., Inc. Record Class F-1 6.14
Custody Account Class F-2 8.13
San Francisco. CA Class R-4 6.74
Class R-5 9.90
-------------------------------------------------------------------------------
Hartford Life Insurance Co. Separate Record Class R-1 26.93
Account Beneficial
401K Plan
Hartford, CT
-------------------------------------------------------------------------------
NFS, LLC FEBO Record Class R-3 7.42
Transamerica Life Insurance Beneficial
Los Angeles, CA
-------------------------------------------------------------------------------
NFS, LLC FEBO Record Class R-4 15.30
401K Plans Beneficial Class R-5 15.88
Covington, KY
-------------------------------------------------------------------------------
Principal Financial Group Record Class R-4 6.65
Omnibus Account
Des Moines, IA
-------------------------------------------------------------------------------
Fundamental Investors -- Page 18
<PAGE>
UNLESS OTHERWISE NOTED, REFERENCES IN THIS STATEMENT OF ADDITIONAL INFORMATION
TO CLASS F SHARES, CLASS R SHARES OR CLASS 529 SHARES REFER TO BOTH F SHARE
CLASSES, ALL R SHARE CLASSES OR ALL 529 SHARE CLASSES, RESPECTIVELY.
INVESTMENT ADVISER -- Capital Research and Management Company, the fund's
investment adviser, founded in 1931, maintains research facilities in the United
States and abroad (Los Angeles, San Francisco, New York, Washington, DC, London,
Geneva, Hong Kong, Singapore and Tokyo). These facilities are staffed with
experienced investment professionals. The investment adviser is located at 333
South Hope Street, Los Angeles, CA 90071 and 6455 Irvine Center Drive, Irvine,
CA 92618. It is a wholly owned subsidiary of The Capital Group Companies, Inc.,
a holding company for several investment management subsidiaries. Capital
Research and Management Company manages equity assets through two investment
divisions, Capital World Investors and Capital Research Global Investors, and
manages fixed-income assets through its Fixed Income division. Capital World
Investors and Capital Research Global Investors make investment decisions on an
independent basis.
The investment adviser has adopted policies and procedures that address issues
that may arise as a result of an investment professional's management of the
fund and other funds and accounts. Potential issues could involve allocation of
investment opportunities and trades among funds and accounts, use of information
regarding the timing of fund trades, investment professional compensation and
voting relating to portfolio securities. The investment adviser believes that
its policies and procedures are reasonably designed to address these issues.
COMPENSATION OF INVESTMENT PROFESSIONALS -- As described in the prospectus, the
investment adviser uses a system of multiple portfolio counselors in managing
fund assets. In addition, Capital Research and Management Company's investment
analysts may make investment decisions with respect to a portion of a fund's
portfolio within their research coverage.
Portfolio counselors and investment analysts are paid competitive salaries by
Capital Research and Management Company. In addition, they may receive bonuses
based on their individual portfolio results. Investment professionals also may
participate in profit-sharing plans. The relative mix of compensation
represented by bonuses, salary and profit-sharing plans will vary depending on
the individual's portfolio results, contributions to the organization and other
factors.
To encourage a long-term focus, bonuses based on investment results are
calculated by comparing pretax total investment returns to relevant benchmarks
over the most recent year, a four-year rolling average and an eight-year rolling
average with greater weight placed on the
Fundamental Investors -- Page 19
<PAGE>
four-year and eight-year rolling averages. For portfolio counselors, benchmarks
may include measures of the marketplaces in which the fund invests and measures
of the results of comparable mutual funds. For investment analysts, benchmarks
may include relevant market measures and appropriate industry or sector indexes
reflecting their areas of expertise. Capital Research and Management Company
makes periodic subjective assessments of analysts' contributions to the
investment process and this is an element of their overall compensation. The
investment results of each of the fund's portfolio counselors may be measured
against one or more of the following benchmarks, depending on his or her
investment focus: S&P 500, MSCI World Index and Lipper Growth & Income Funds
Index.
PORTFOLIO COUNSELOR FUND HOLDINGS AND OTHER MANAGED ACCOUNTS -- As described
below, portfolio counselors may personally own shares of the fund. In addition,
portfolio counselors may manage portions of other mutual funds or accounts
advised by Capital Research and Management Company or its affiliates.
THE FOLLOWING TABLE REFLECTS INFORMATION AS OF DECEMBER 31, 2008:
NUMBER NUMBER
OF OTHER OF OTHER NUMBER
REGISTERED POOLED OF OTHER
INVESTMENT INVESTMENT ACCOUNTS
COMPANIES (RICS) VEHICLES (PIVS) FOR WHICH
FOR WHICH FOR WHICH PORTFOLIO
PORTFOLIO PORTFOLIO COUNSELOR
DOLLAR RANGE COUNSELOR COUNSELOR IS A MANAGER
OF FUND IS A MANAGER IS A MANAGER (ASSETS OF
PORTFOLIO SHARES (ASSETS OF RICS (ASSETS OF PIVS OTHER ACCOUNTS
COUNSELOR OWNED/1/ IN BILLIONS)/2/ IN BILLIONS)/3/ IN BILLIONS)/4/
----------------------------------------------------------------------------------------
Dina N. Perry Over 3 $134.3 1 $0.71 None
$1,000,000
-----------------------------------------------------------------------------------------
Michael T. Kerr $500,001 - 2 $190.8 None None
$1,000,000
-----------------------------------------------------------------------------------------
Ronald B. $100,001 - 3 $239.6 None None
Morrow $500,000
-----------------------------------------------------------------------------------------
James E. Drasdo Over 1 $117.9 None None
$1,000,000
-----------------------------------------------------------------------------------------
Brady L. $100,001 - 2 $ 46.3 None None
Enright $500,000
-----------------------------------------------------------------------------------------
1 Ownership disclosure is made using the following ranges: None; $1 - $10,000;
$10,001 - $50,000; $50,001 - $100,000; $100,001 - $500,000; $500,001 -
$1,000,000; and Over $1,000,000. The amounts listed include shares owned
through The Capital Group Companies, Inc. retirement plan and 401(k) plan.
2 Indicates fund(s) where the portfolio counselor also has significant
responsibilities for the day to day management of the fund(s). Assets noted are
the total net assets of the registered investment companies and are not the
total assets managed by the individual, which is a substantially lower amount.
No fund has an advisory fee that is based on the performance of the fund.
3 Represents funds advised or sub-advised by Capital Research and Management
Company and sold outside the United States and/ or fixed-income assets in
institutional accounts managed by investment adviser subsidiaries of Capital
Group International, Inc., an affiliate of Capital Research and Management
Company. Assets noted are the total net assets of the funds or accounts and are
not the total assets managed by the individual, which is a substantially lower
amount. No fund or account has an advisory fee that is based on the performance
of the fund or account.
4 Reflects other professionally managed accounts held at companies affiliated
with Capital Research and Management Company. Personal brokerage accounts of
portfolio counselors and their families are not reflected.
Fundamental Investors -- Page 20
<PAGE>
INVESTMENT ADVISORY AND SERVICE AGREEMENT -- The Investment Advisory and Service
Agreement (the "Agreement") between the fund and the investment adviser will
continue in effect until August 31, 2009, unless sooner terminated, and may be
renewed from year to year thereafter, provided that any such renewal has been
specifically approved at least annually by (a) the board of directors, or by the
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the fund, and (b) the vote of a majority of directors who are not
parties to the Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. The Agreement provides that the investment adviser has no
liability to the fund for its acts or omissions in the performance of its
obligations to the fund not involving willful misconduct, bad faith, gross
negligence or reckless disregard of its obligations under the Agreement. The
Agreement also provides that either party has the right to terminate it, without
penalty, upon 60 days' written notice to the other party, and that the Agreement
automatically terminates in the event of its assignment (as defined in the 1940
Act).
In addition to providing investment advisory services, the investment adviser
furnishes the services and pays the compensation and travel expenses of persons
to perform the fund's executive, administrative, clerical and bookkeeping
functions, and provides suitable office space, necessary small office equipment
and utilities, general purpose accounting forms, supplies and postage used at
the fund's offices. The fund pays all expenses not assumed by the investment
adviser, including, but not limited to: custodian, stock transfer and dividend
disbursing fees and expenses; shareholder recordkeeping and administrative
expenses; costs of the designing, printing and mailing of reports, prospectuses,
proxy statements and notices to its shareholders; taxes; expenses of the
issuance and redemption of fund shares (including stock certificates,
registration and qualification fees and expenses); expenses pursuant to the
fund's plans of distribution (described below); legal and auditing expenses;
compensation, fees and expenses paid to independent directors; association dues;
costs of stationery and forms prepared exclusively for the fund; and costs of
assembling and storing shareholder account data.
As compensation for its services, the investment adviser receives a monthly
management fee that is based on average daily net assets and is calculated at an
annual rate of 0.39% on the first $1 billion of the fund's net assets, plus
0.336% on net assets over $1 billion to $2 billion, plus 0.30% on net assets
over $2 billion to $3 billion, plus 0.276% on net assets over $3 billion to $5
billion, plus 0.27% on net assets over $5 billion to $8 billion, plus 0.258% on
net assets over $8 billion to $13 billion, plus 0.252% on net assets over $13
billion to $17 billion, plus 0.250% on net assets over $17 billion to $21
billion, plus 0.245% on net assets over $21 billion to $27 billion, plus 0.240%
on net assets over $27 billion to $34 billion, plus 0.237% on net assets over
$34 billion to $44 billion, plus 0.234% on net assets over $44 billion to $55
billion, plus 0.232% on net assets over $55 billion.
The investment adviser has agreed to waive any fees to the extent they would
exceed those payable under the rate structure contained in its previous
agreement that was in effect from December 1, 1991 through May 31, 1998. The fee
structure referenced above is lower than that in the previous agreement except
in the event that the fund's net assets were to fall below $8 billion when fees
are equal to, or higher than, that in the previous agreement.
The Agreement provides for a management fee reduction to the extent that the
annual ordinary operating expenses of the fund's Class A shares exceed 1% of the
average net assets in excess thereof. Expenses which are not subject to these
limitations are interest, taxes and extraordinary expenses. Expenditures,
including costs incurred in connection with the purchase or sale of
Fundamental Investors -- Page 21
<PAGE>
portfolio securities, which are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, are accounted
for as capital items and not as expenses. To the extent the fund's management
fee must be waived due to Class A share expense ratios exceeding the expense
limitations described above, management fees will be reduced similarly for all
classes of shares of the fund, or other Class A fees will be waived in lieu of
management fees.
For the fiscal years ended December 31, 2008, 2007 and 2006, the investment
adviser was entitled to receive from the fund management fees of $115,983,000,
$115,799,000 and $87,469,000, respectively. After giving effect to the
management fee waivers described below, the fund paid the investment adviser
management fees of $104,385,000 (a reduction of $11,598,000), $104,219,000 (a
reduction of $11,580,000) and $78,722,000 (a reduction of $8,747,000) for the
fiscal years ended December 31, 2008, 2007 and 2006, respectively.
For the period from September 1, 2004 through March 31, 2005, the investment
adviser agreed to waive 5% of the management fees that it was otherwise entitled
to receive under the Agreement. From April 1, 2005 through December 31, 2008,
this waiver increased to 10% of the management fees that the investment adviser
was otherwise entitled to receive. The waiver was discontinued effective January
1, 2009.
ADMINISTRATIVE SERVICES AGREEMENT -- The Administrative Services Agreement (the
"Administrative Agreement") between the fund and the investment adviser relating
to the fund's Class C, F, R and 529 shares will continue in effect until August
31, 2009, unless sooner terminated, and may be renewed from year to year
thereafter, provided that any such renewal has been specifically approved at
least annually by the vote of a majority of directors who are not parties to the
Administrative Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. The fund may terminate the Administrative Agreement at any time
by vote of a majority of independent directors. The investment adviser has the
right to terminate the Administrative Agreement upon 60 days' written notice to
the fund. The Administrative Agreement automatically terminates in the event of
its assignment (as defined in the 1940 Act).
Under the Administrative Agreement, the investment adviser provides certain
transfer agent and administrative services for shareholders of the fund's Class
C and F shares, and Class R and 529 shares. The investment adviser may contract
with third parties, including American Funds Service Company,/(R)/ the fund's
Transfer Agent, to provide some of these services. Services include, but are not
limited to, shareholder account maintenance, transaction processing, tax
information reporting and shareholder and fund communications. In addition, the
investment adviser monitors, coordinates, oversees and assists with the
activities performed by third parties providing such services.
The investment adviser receives an administrative services fee at the annual
rate of up to 0.15% of the average daily net assets for Class C, F, R (excluding
Class R-5 shares) and 529 shares for administrative services provided to these
share classes. Administrative services fees are paid monthly and accrued daily.
The investment adviser uses a portion of this fee to compensate third parties
for administrative services provided to the fund. Of the remainder, the
investment adviser does not retain more than 0.05% of the average daily net
assets for each applicable share class. For Class R-5 shares, the administrative
services fee is calculated at the annual rate of up to 0.10% of the average
daily net assets. The administrative services fee includes compensation for
transfer agent and shareholder services provided to the fund's Class C, F, R and
529 shares. In
Fundamental Investors -- Page 22
<PAGE>
addition to making administrative service fee payments to unaffiliated third
parties, the investment adviser also makes payments from the administrative
services fee to American Funds Service Company according to a fee schedule,
based principally on the number of accounts serviced, contained in a Shareholder
Services Agreement between the fund and American Funds Service Company. A
portion of the fees paid to American Funds Service Company for transfer agent
services is also paid directly from the relevant share class.
During the 2008 fiscal year, administrative services fees, gross of any payments
made by the investment adviser, were:
ADMINISTRATIVE SERVICES FEE
--------------------------------------------------------------------------------
CLASS C $3,055,000
--------------------------------------------------------------------------------
CLASS F-1 3,671,000
--------------------------------------------------------------------------------
CLASS F-2 24,000
--------------------------------------------------------------------------------
CLASS 529-A 652,000
--------------------------------------------------------------------------------
CLASS 529-B 87,000
--------------------------------------------------------------------------------
CLASS 529-C 218,000
--------------------------------------------------------------------------------
CLASS 529-E 29,000
--------------------------------------------------------------------------------
CLASS 529-F-1 24,000
--------------------------------------------------------------------------------
CLASS R-1 107,000
--------------------------------------------------------------------------------
CLASS R-2 2,138,000
--------------------------------------------------------------------------------
CLASS R-3 2,543,000
--------------------------------------------------------------------------------
CLASS R-4 1,587,000
--------------------------------------------------------------------------------
CLASS R-5 1,065,000
--------------------------------------------------------------------------------
PRINCIPAL UNDERWRITER AND PLANS OF DISTRIBUTION -- American Funds
Distributors,/(R)/ Inc. (the "Principal Underwriter") is the principal
underwriter of the fund's shares. The Principal Underwriter is located at 333
South Hope Street, Los Angeles, CA 90071; 6455 Irvine Center Drive, Irvine, CA
92618; 3500 Wiseman Boulevard, San Antonio, TX 78251; 8332 Woodfield Crossing
Boulevard, Indianapolis, IN 46240; and 5300 Robin Hood Road, Norfolk, VA 23513.
The Principal Underwriter receives revenues relating to sales of the fund's
shares, as follows:
. For Class A and 529-A shares, the Principal Underwriter receives
commission revenue consisting of the balance of the Class A and 529-A
sales charge remaining after the allowances by the Principal
Underwriter to investment dealers.
. For Class B and 529-B shares, the Principal Underwriter sells its
rights to the 0.75% distribution-related portion of the 12b-1 fees
paid by the fund, as well as any contingent deferred sales charges, to
a third party. The Principal Underwriter compensates investment
dealers for sales of Class B and 529-B shares out of the proceeds of
this sale and keeps any amounts remaining after this compensation is
paid.
Fundamental Investors -- Page 23
<PAGE>
. For Class C and 529-C shares, the Principal Underwriter receives any
contingent deferred sales charges that apply during the first year
after purchase.
In addition, the fund reimburses the Principal Underwriter for advancing
immediate service fees to qualified dealers and advisers upon the sale of Class
B, 529-B, C and 529-C shares. The fund also reimburses the Principal Underwriter
for service fees (and, in the case of Class 529-E shares, commissions) paid on a
quarterly basis to qualified dealers and advisers in connection with investments
in Class F-1, 529-F-1, 529-E, R-1, R-2, R-3 and R-4 shares.
Commissions, revenue or service fees retained by the Principal Underwriter after
allowances or compensation to dealers were:
COMMISSIONS, ALLOWANCE OR
REVENUE COMPENSATION
FISCAL YEAR/PERIOD OR FEES RETAINED TO DEALERS
-----------------------------------------------------------------------------------------------------
CLASS A 2008 $22,580,000 $ 99,505,000
2007 23,001,000 100,028,000
2006 20,462,000 89,708,000
-----------------------------------------------------------------------------------------------------
CLASS B 2008 763,000 6,709,000
2007 1,020,000 6,693,000
2006 788,000 5,960,000
-----------------------------------------------------------------------------------------------------
CLASS C 2008 272,000 5,732,000
2007 -- 6,137,000
2006 -- 4,452,000
-----------------------------------------------------------------------------------------------------
CLASS 529-A 2008 877,000 4,067,000
2007 947,000 4,327,000
2006 696,000 3,180,000
-----------------------------------------------------------------------------------------------------
CLASS 529-B 2008 49,000 393,000
2007 58,000 407,000
2006 46,000 328,000
-----------------------------------------------------------------------------------------------------
CLASS 529-C 2008 -- 502,000
2007 -- 543,000
2006 -- 363,000
-----------------------------------------------------------------------------------------------------
Fundamental Investors -- Page 24
<PAGE>
Plans of distribution -- The fund has adopted plans of distribution (the
"Plans") pursuant to rule 12b-1 under the 1940 Act. The Plans permit the fund to
expend amounts to finance any activity primarily intended to result in the sale
of fund shares, provided the fund's board of directors has approved the category
of expenses for which payment is being made.
Each Plan is specific to a particular share class of the fund. As the fund has
not adopted a Plan for Class F-2 or Class R-5, no 12b-1 fees are paid from Class
F-2 or Class R-5 share assets and the following disclosure is not applicable to
these share classes.
Payments under the Plans may be made for service-related and/or
distribution-related expenses. Service-related expenses include paying service
fees to qualified dealers. Distribution-related expenses include commissions
paid to qualified dealers. The amounts actually paid under the Plans for the
past fiscal year, expressed as a percentage of the fund's average daily net
assets attributable to the applicable share class, are disclosed in the
prospectus under "Fees and expenses of the fund." Further information regarding
the amounts available under each Plan is in the "Plans of Distribution" section
of the prospectus.
Following is a brief description of the Plans:
CLASS A AND 529-A -- For Class A and 529-A shares, up to 0.25% of the
fund's average daily net assets attributable to such shares is reimbursed
to the Principal Underwriter for paying service-related expenses, and the
balance available under the applicable Plan may be paid to the Principal
Underwriter for distribution-related expenses. The fund may annually expend
up to 0.25% for Class A shares and up to 0.50% for Class 529-A shares under
the applicable Plan.
Distribution-related expenses for Class A and 529-A shares include dealer
commissions and wholesaler compensation paid on sales of shares of $1
million or more purchased without a sales charge. Commissions on these "no
load" purchases (which are described in further detail under the "Sales
Charges" section of this statement of additional information) in excess of
the Class A and 529-A Plan limitations and not reimbursed to the Principal
Underwriter during the most recent fiscal quarter are recoverable for five
quarters, provided that the reimbursement of such commissions does not
cause the fund to exceed the annual expense limit. After five quarters,
these commissions are not recoverable.
CLASS B AND 529-B -- The Plans for Class B and 529-B shares provide for
payments to the Principal Underwriter of up to 0.25% of the fund's average
daily net assets attributable
Fundamental Investors -- Page 25
<PAGE>
to such shares for paying service-related expenses and 0.75% for
distribution-related expenses, which include the financing of commissions
paid to qualified dealers.
OTHER SHARE CLASSES (CLASS C, 529-C, F-1, 529-F-1, 529-E, R-1, R-2, R-3 AND
R-4) -- The Plans for each of the other share classes that have adopted
Plans provide for payments to the Principal Underwriter for paying
service-related and distribution-related expenses of up to the following
amounts of the fund's average daily net assets attributable to such shares:
TOTAL
SERVICE DISTRIBUTION ALLOWABLE
RELATED RELATED UNDER
SHARE CLASS PAYMENTS/1/ PAYMENTS/1/ THE PLANS/2/
----------------------------------------------------------------------------------
Class C 0.25% 0.75% 1.00%
----------------------------------------------------------------------------------
Class 529-C 0.25 0.75 1.00
----------------------------------------------------------------------------------
Class F-1 0.25 -- 0.50
----------------------------------------------------------------------------------
Class 529-F-1 0.25 -- 0.50
----------------------------------------------------------------------------------
Class 529-E 0.25 0.25 0.75
----------------------------------------------------------------------------------
Class R-1 0.25 0.75 1.00
----------------------------------------------------------------------------------
Class R-2 0.25 0.50 1.00
----------------------------------------------------------------------------------
Class R-3 0.25 0.25 0.75
----------------------------------------------------------------------------------
Class R-4 0.25 -- 0.50
----------------------------------------------------------------------------------
1 Amounts in these columns represent the amounts approved by the board of
directors under the applicable Plan.
2 The fund may annually expend the amounts set forth in this column under
the current Plans with the approval of the board of directors.
During the 2008 fiscal year, 12b-1 expenses accrued and paid, and if applicable,
unpaid, were:
12B-1 UNPAID LIABILITY
12B-1 EXPENSES OUTSTANDING
------------------------------------------------------------------------------
CLASS A $80,557,000 $4,352,000
------------------------------------------------------------------------------
CLASS B 13,828,000 773,000
------------------------------------------------------------------------------
CLASS C 19,214,000 1,224,000
------------------------------------------------------------------------------
CLASS F-1 8,841,000 1,266,000
------------------------------------------------------------------------------
CLASS 529-A 1,199,000 76,000
------------------------------------------------------------------------------
CLASS 529-B 719,000 47,000
------------------------------------------------------------------------------
CLASS 529-C 1,855,000 134,000
------------------------------------------------------------------------------
CLASS 529-E 136,000 9,000
------------------------------------------------------------------------------
CLASS 529-F-1 -- --
------------------------------------------------------------------------------
CLASS R-1 655,000 57,000
------------------------------------------------------------------------------
CLASS R-2 3,405,000 230,000
------------------------------------------------------------------------------
CLASS R-3 6,137,000 450,000
------------------------------------------------------------------------------
CLASS R-4 2,609,000 207,000
------------------------------------------------------------------------------
Fundamental Investors -- Page 26
<PAGE>
Approval of the Plans -- As required by rule 12b-1 and the 1940 Act, the Plans
(together with the Principal Underwriting Agreement) have been approved by the
full board of directors and separately by a majority of the independent
directors of the fund who have no direct or indirect financial interest in the
operation of the Plans or the Principal Underwriting Agreement. In addition, the
selection and nomination of independent directors of the fund are committed to
the discretion of the independent directors during the existence of the Plans.
Potential benefits of the Plans to the fund include quality shareholder
services, savings to the fund in transfer agency costs, and benefits to the
investment process from growth or stability of assets. The Plans may not be
amended to materially increase the amount spent for distribution without
shareholder approval. Plan expenses are reviewed quarterly by the board of
directors and the Plans must be renewed annually by the board of directors.
FEE TO VIRGINIA COLLEGE SAVINGS PLAN -- With respect to Class 529 Shares, as
compensation for its oversight and administration, Virginia College Savings Plan
receives a quarterly fee accrued daily and calculated at the annual rate of
0.10% on the first $30 billion of the net assets invested in Class 529 Shares of
the American Funds, 0.09% on net assets between $30 billion and $60 billion,
0.08% on net assets between $60 billion and $90 billion, 0.07% on net assets
between $90 billion and $120 billion, and 0.06% on net assets between $120
billion and $150 billion. The fee for any given calendar quarter is accrued and
calculated on the basis of average net assets of Class 529 Shares of the
American Funds for the last month of the prior calendar quarter.
OTHER COMPENSATION TO DEALERS -- As of October 2008, the top dealers (or their
affiliates) that American Funds Distributors anticipates will receive additional
compensation (as described in the prospectus) include:
AIG Advisors Group
Advantage Capital Corporation
AIG Financial Advisors, Inc.
American General Securities Incorporated
FSC Securities Corporation
Royal Alliance Associates, Inc.
AXA Advisors, LLC
Cadaret, Grant & Co., Inc.
Cambridge Investment Research, Inc.
Commonwealth Financial Network
Cuna Brokerage Services, Inc.
Deutsche Bank Securities Inc.
Edward Jones
Fundamental Investors -- Page 27
<PAGE>
Genworth Financial Securities Corporation
Hefren-Tillotson, Inc.
HTK / Janney Montgomery Group
Hornor, Townsend & Kent, Inc.
Janney Montgomery Scott LLC
ING Advisors Network Inc.
Bancnorth Investment Group, Inc.
Financial Network Investment Corporation
Guaranty Brokerage Services, Inc.
ING Financial Partners, Inc.
Multi-Financial Securities Corporation
Primevest Financial Services, Inc.
Intersecurities / Transamerica
InterSecurities, Inc.
Transamerica Financial Advisors, Inc.
JJB Hilliard/PNC Bank
J.J.B. Hilliard, W.L. Lyons, Inc.
PNC Bank, National Association
PNC Investments LLC
Lincoln Financial Advisors Corporation
LPL Group
Associated Securities Corp.
LPL Financial Corporation
Mutual Service Corporation
Uvest Investment Services
Waterstone Financial Group, Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Metlife Enterprises
Metlife Securities Inc.
New England Securities
Tower Square Securities
Walnut Street Securities, Inc.
MML Investors Services, Inc.
Morgan Keegan & Company, Inc.
Morgan Stanley & Co., Incorporated
National Planning Holdings Inc.
Invest Financial Corporation
Investment Centers of America, Inc.
National Planning Corporation
SII Investments, Inc.
NFP Securities, Inc.
Northwestern Mutual Investment Services, LLC
Park Avenue Securities LLC
Princor Financial Services Corporation
Raymond James Group
Raymond James & Associates, Inc.
Raymond James Financial Services Inc.
RBC Dain Rauscher Inc.
Robert W. Baird & Co. Incorporated
Fundamental Investors -- Page 28
<PAGE>
Securian / C.R.I.
CRI Securities, LLC
Securian Financial Services, Inc.
Smith Barney
Legg Mason
Primerica Financial Services
U.S. Bancorp Investments, Inc.
UBS Financial Services Inc.
Wachovia Group
A. G. Edwards, a Division of Wachovia Securities, LLC
First Clearing LLC
Wachovia Securities Financial Network, LLC
Wachovia Securities Investment Services Group
Wachovia Securities Latin American Channel
Wachovia Securities Private Client Group
Wells Fargo Investments, LLC
EXECUTION OF PORTFOLIO TRANSACTIONS
The investment adviser places orders with broker-dealers for the fund's
portfolio transactions. Purchases and sales of equity securities on a securities
exchange or an over-the-counter market are effected through broker-dealers who
receive commissions for their services. Generally, commissions relating to
securities traded on foreign exchanges will be higher than commissions relating
to securities traded on U.S. exchanges and may not be subject to negotiation.
Equity securities may also be purchased from underwriters at prices that include
underwriting fees. Purchases and sales of fixed-income securities are generally
made with an issuer or a primary market-maker acting as principal with no stated
brokerage commission. The price paid to an underwriter for fixed-income
securities includes underwriting fees. Prices for fixed-income securities in
secondary trades usually include undisclosed compensation to the market-maker
reflecting the spread between the bid and ask prices for the securities.
In selecting broker-dealers, the investment adviser strives to obtain "best
execution" (the most favorable total price reasonably attainable under the
circumstances) for the fund's portfolio transactions, taking into account a
variety of factors. These factors include the size and type of transaction, the
nature and character of the markets for the security to be purchased or sold,
the cost, quality and reliability of the executions and the broker-dealer's
ability to offer liquidity and anonymity. The investment adviser considers these
factors, which involve qualitative judgments, when selecting broker-dealers and
execution venues for fund portfolio transactions. The investment adviser views
best execution as a process that should be evaluated over time as part of an
overall relationship with particular broker-dealer firms rather than on a
trade-by-trade basis. The fund does not consider the investment adviser as
having an obligation to obtain the lowest commission rate available for a
portfolio transaction to the exclusion of price, service and qualitative
considerations.
The investment adviser may execute portfolio transactions with broker-dealers
who provide certain brokerage and/or investment research services to it, but
only when in the investment adviser's judgment the broker-dealer is capable of
providing best execution for that transaction. The receipt of these services
permits the investment adviser to supplement its own research and analysis and
makes available the views of, and information from, individuals and the research
staffs of other firms. Such views and information may be provided in the form of
written reports,
Fundamental Investors -- Page 29
<PAGE>
telephone contacts and meetings with securities analysts. These services may
include, among other things, reports and other communications with respect to
individual companies, industries, countries and regions, economic, political and
legal developments, as well as scheduling meetings with corporate executives and
seminars and conferences related to relevant subject matters. The investment
adviser considers these services to be supplemental to its own internal research
efforts and therefore the receipt of investment research from broker-dealers
does not tend to reduce the expenses involved in the investment adviser's
research efforts. If broker-dealers were to discontinue providing such services
it is unlikely the investment adviser would attempt to replicate them on its
own, in part because they would then no longer provide an independent,
supplemental viewpoint. Nonetheless, if it were to attempt to do so, the
investment adviser would incur substantial additional costs. Research services
that the investment adviser receives from broker-dealers may be used by the
investment adviser in servicing the fund and other funds and accounts that it
advises; however, not all such services will necessarily benefit the fund.
The investment adviser may pay commissions in excess of what other
broker-dealers might have charged - including on an execution-only basis - for
certain portfolio transactions in recognition of brokerage and/or investment
research services provided by a broker-dealer. In this regard, the investment
adviser has adopted a brokerage allocation procedure consistent with the
requirements of Section 28(e) of the U.S. Securities Exchange Act of 1934.
Section 28(e) permits an investment adviser to cause an account to pay a higher
commission to a broker-dealer that provides certain brokerage and/or investment
research services to the investment adviser, if the investment adviser makes a
good faith determination that such commissions are reasonable in relation to the
value of the services provided by such broker-dealer to the investment adviser
in terms of that particular transaction or the investment adviser's overall
responsibility to the fund and other accounts that it advises. Certain brokerage
and/or investment research services may not necessarily benefit all accounts
paying commissions to each such broker-dealer; therefore, the investment adviser
assesses the reasonableness of commissions in light of the total brokerage and
investment research services provided by each particular broker-dealer.
In accordance with its internal brokerage allocation procedure, each equity
investment division of the investment adviser periodically assesses the
brokerage and investment research services provided by each broker-dealer from
which it receives such services. Using its judgment, each equity investment
division of the investment adviser then creates lists with suggested levels of
commissions for particular broker-dealers and provides those lists to its
trading desks. Neither the investment adviser nor the fund incurs any obligation
to any broker-dealer to pay for research by generating trading commissions. The
actual level of business received by any broker-dealer may be less than the
suggested level of commissions and can, and often does, exceed the suggested
level in the normal course of business. As part of its ongoing relationships
with broker-dealers, the investment adviser routinely meets with firms,
typically at the firm's request, to discuss the level and quality of the
brokerage and research services provided, as well as the perceived value and
cost of such services. In valuing the brokerage and investment research services
the investment adviser receives from broker-dealers in connection with its good
faith determination of reasonableness, the investment adviser does not attribute
a dollar value to such services, but rather takes various factors into
consideration, including the quantity, quality and usefulness of the services to
the investment adviser.
The investment adviser seeks, on an ongoing basis, to determine what the
reasonable levels of commission rates are in the marketplace. The investment
adviser takes various considerations into account when evaluating such
reasonableness, including, (a) rates quoted by broker--
Fundamental Investors -- Page 30
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dealers, (b) the size of a particular transaction in terms of the number of
shares and dollar amount, (c) the complexity of a particular transaction, (d)
the nature and character of the markets on which a particular trade takes place,
(e) the ability of a broker-dealer to provide anonymity while executing trades,
(f) the ability of a broker-dealer to execute large trades while minimizing
market impact, (g) the extent to which a broker-dealer has put its own capital
at risk, (h) the level and type of business done with a particular broker-dealer
over a period of time, (i) historical commission rates, and (j) commission rates
that other institutional investors are paying.
When executing portfolio transactions in the same equity security for the funds
and accounts, or portions of funds and accounts, over which the investment
adviser, through its equity investment divisions, has investment discretion,
each of the investment divisions will normally aggregate its respective
purchases or sales and execute them as part of the same transaction or series of
transactions. When executing portfolio transactions in the same fixed-income
security for the fund and the other funds or accounts over which it or one of
its affiliated companies has investment discretion, the investment adviser will
normally aggregate such purchases or sales and execute them as part of the same
transaction or series of transactions. The objective of aggregating purchases
and sales of a security is to allocate executions in an equitable manner among
the funds and other accounts that have concurrently authorized a transaction in
such security.
The investment adviser may place orders for the fund's portfolio transactions
with broker-dealers who have sold shares in the funds managed by the investment
adviser or its affiliated companies; however, it does not consider whether a
broker-dealer has sold shares of the funds managed by the investment adviser or
its affiliated companies when placing any such orders for the fund's portfolio
transactions.
Brokerage commissions paid on portfolio transactions for the fiscal years ended
December 31, 2008, 2007 and 2006 amounted to $23,964,000, $18,379,000 and
$17,751,000, respectively. The volume of trading activity increased during 2008,
resulting in an increase in brokerage commissions paid on portfolio
transactions.
The fund is required to disclose information regarding investments in the
securities of its "regular" broker-dealers (or parent companies of its regular
broker-dealers) that derive more than 15% of their revenue from broker-dealer,
underwriter or investment adviser activities. A regular broker-dealer is (a) one
of the 10 broker-dealers that received from the fund the largest amount of
brokerage commissions by participating, directly or indirectly, in the fund's
portfolio transactions during the fund's most recent fiscal year; (b) one of the
10 broker-dealers that engaged as principal in the largest dollar amount of
portfolio transactions of the fund during the fund's most recent fiscal year; or
(c) one of the 10 broker-dealers that sold the largest amount of securities of
the fund during the fund's most recent fiscal year.
At the end of the fund's most recent fiscal year, the fund's regular
broker-dealers included Citigroup Global Markets Inc. and J.P. Morgan Securities
Inc. As of the fund's most recent fiscal year-end, the fund held equity
securities of Citigroup Inc. in the amount of $193,919,000 and JPMorgan Chase &
Co. in the amount of $252,240,000.
DISCLOSURE OF PORTFOLIO HOLDINGS
The fund's investment adviser, on behalf of the fund, has adopted policies and
procedures with respect to the disclosure of information about fund portfolio
securities. These policies and
Fundamental Investors -- Page 31
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procedures have been reviewed by the fund's board of directors and compliance
will be periodically assessed by the board in connection with reporting from the
fund's Chief Compliance Officer.
Under these policies and procedures, the fund's complete list of portfolio
holdings available for public disclosure, dated as of the end of each calendar
quarter, is permitted to be posted on the American Funds website no earlier than
the tenth day after such calendar quarter. In practice, the public portfolio
typically is posted on the website approximately 45 days after the end of the
calendar quarter. In addition, the fund's list of top 10 equity portfolio
holdings measured by percentage of net assets invested, dated as of the end of
each calendar month, is permitted to be posted on the American Funds website no
earlier than the tenth day after such month. Such portfolio holdings information
may then be disclosed to any person pursuant to an ongoing arrangement to
disclose portfolio holdings information to such person no earlier than one day
after the day on which the information is posted on the American Funds website.
The fund's custodian, outside counsel and auditor, each of which requires
portfolio holdings information for legitimate business and fund oversight
purposes, may receive the information earlier.
Affiliated persons of the fund, including officers of the fund and employees of
the investment adviser and its affiliates, who receive portfolio holdings
information are subject to restrictions and limitations on the use and handling
of such information pursuant to applicable codes of ethics, including
requirements not to trade in securities based on confidential and proprietary
investment information, to maintain the confidentiality of such information, and
to preclear securities trades and report securities transactions activity, as
applicable. For more information on these restrictions and limitations, please
see the "Code of Ethics" section in this statement of additional information and
the Code of Ethics. Third party service providers of the fund, as described in
this statement of additional information, receiving such information are subject
to confidentiality obligations. When portfolio holdings information is disclosed
other than through the American Funds website to persons not affiliated with the
fund (which, as described above, would typically occur no earlier than one day
after the day on which the information is posted on the American Funds website),
such persons will be bound by agreements (including confidentiality agreements)
or fiduciary obligations that restrict and limit their use of the information to
legitimate business uses only. Neither the fund nor its investment adviser or
any affiliate thereof receives compensation or other consideration in connection
with the disclosure of information about portfolio securities.
Subject to board policies, the authority to disclose a fund's portfolio
holdings, and to establish policies with respect to such disclosure, resides
with the appropriate investment-related committees of the fund's investment
adviser. In exercising their authority, the committees determine whether
disclosure of information about the fund's portfolio securities is appropriate
and in the best interest of fund shareholders. The investment adviser has
implemented policies and procedures to address conflicts of interest that may
arise from the disclosure of fund holdings. For example, the investment
adviser's code of ethics specifically requires, among other things, the
safeguarding of information about fund holdings and contains prohibitions
designed to prevent the personal use of confidential, proprietary investment
information in a way that would conflict with fund transactions. In addition,
the investment adviser believes that its current policy of not selling portfolio
holdings information and not disclosing such information to unaffiliated third
parties until such holdings have been made public on the American Funds website
(other than to certain fund service providers for legitimate business and fund
oversight purposes) helps reduce potential conflicts of interest between fund
shareholders and the investment adviser and its affiliates.
Fundamental Investors -- Page 32
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PRICE OF SHARES
Shares are purchased at the offering price or sold at the net asset value price
next determined after the purchase or sell order is received and accepted by the
fund or the Transfer Agent; the offering or net asset value price is effective
for orders received prior to the time of determination of the net asset value
and, in the case of orders placed with dealers or their authorized designees,
accepted by the Principal Underwriter, the Transfer Agent, a dealer or any of
their designees. In the case of orders sent directly to the fund or the Transfer
Agent, an investment dealer should be indicated. The dealer is responsible for
promptly transmitting purchase and sell orders to the Principal Underwriter.
Orders received by the investment dealer or authorized designee, the Transfer
Agent or the fund after the time of the determination of the net asset value
will be entered at the next calculated offering price. Note that investment
dealers or other intermediaries may have their own rules about share
transactions and may have earlier cut-off times than those of the fund. For more
information about how to purchase through your intermediary, contact your
intermediary directly.
Prices that appear in the newspaper do not always indicate prices at which you
will be purchasing and redeeming shares of the fund, since such prices generally
reflect the previous day's closing price, while purchases and redemptions are
made at the next calculated price. The price you pay for shares, the offering
price, is based on the net asset value per share, which is calculated once daily
as of approximately 4 p.m. New York time, which is the normal close of trading
on the New York Stock Exchange, each day the Exchange is open. If, for example,
the Exchange closes at 1 p.m., the fund's share price would still be determined
as of 4 p.m. New York time. The New York Stock Exchange is currently closed on
weekends and on the following holidays: New Year's Day; Martin Luther King, Jr.
Day; Presidents' Day; Good Friday; Memorial Day; Independence Day; Labor Day;
Thanksgiving; and Christmas Day. Each share class of the fund has a separately
calculated net asset value (and share price).
All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset values per
share for each share class are determined, as indicated below. The fund follows
standard industry practice by typically reflecting changes in its holdings of
portfolio securities on the first business day following a portfolio trade.
1. Equity securities, including depositary receipts, are valued at the
official closing price of, or the last reported sale price on, the exchange or
market on which such securities are traded, as of the close of business on the
day the securities are being valued or, lacking any sales, at the last available
bid price. Prices for each security are taken from the principal exchange or
market in which the security trades. Fixed-income securities are valued at
prices obtained from an independent pricing service, when such prices are
available; however, in circumstances where the investment adviser deems it
appropriate to do so, such securities will be valued at the mean quoted bid and
asked prices (or bid prices, if asked prices are not available) or at prices for
securities of comparable maturity, quality and type. The pricing services base
bond prices on, among other things, an evaluation of the yield curve as of
approximately 3 p.m. New York time. The fund's investment adviser performs
certain checks on these prices prior to calculation of the fund's net asset
value.
Securities with both fixed-income and equity characteristics (e.g., convertible
bonds, preferred stocks, units comprised of more than one type of security,
etc.), or equity securities traded prin-
Fundamental Investors -- Page 33
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cipally among fixed-income dealers, are valued in the manner described above for
either equity or fixed-income securities, depending on which method is deemed
most appropriate by the investment adviser.
Securities with original maturities of one year or less having 60 days or less
to maturity are amortized to maturity based on their cost if acquired within 60
days of maturity, or if already held on the 60th day, based on the value
determined on the 61st day. Forward currency contracts are valued at the mean of
representative quoted bid and asked prices.
Assets or liabilities initially expressed in terms of currencies other than U.S.
dollars are translated prior to the next determination of the net asset value of
the fund's shares into U.S. dollars at the prevailing market rates.
Securities and assets for which market quotations are not readily available or
are considered unreliable are valued at fair value as determined in good faith
under policies approved by the fund's board. Subject to board oversight, the
fund's board has delegated the obligation to make fair valuation determinations
to a valuation committee established by the fund's investment adviser. The board
receives regular reports describing fair-valued securities and the valuation
methods used.
The valuation committee has adopted guidelines and procedures (consistent with
SEC rules and guidance) to ensure that certain basic principles and factors are
considered when making all fair value determinations. As a general principle,
securities lacking readily available market quotations, or that have quotations
that are considered unreliable by the investment adviser, are valued in good
faith by the valuation committee based upon what the fund might reasonably
expect to receive upon their current sale. The valuation committee considers all
indications of value available to it in determining the fair value to be
assigned to a particular security, including, without limitation, the type and
cost of the security, contractual or legal restrictions on resale of the
security, relevant financial or business developments of the issuer, actively
traded similar or related securities, conversion or exchange rights on the
security, related corporate actions, significant events occurring after the
close of trading in the security and changes in overall market conditions. The
valuation committee employs additional fair value procedures to address issues
related to equity holdings of applicable fund portfolios outside the United
States. Securities owned by these funds trade in markets that open and close at
different times, reflecting time zone differences. If significant events occur
after the close of a market (and before these fund's net asset values are next
determined) which affect the value of portfolio securities, appropriate
adjustments from closing market prices may be made to reflect these events.
Events of this type could include, for example, earthquakes and other natural
disasters or significant price changes in other markets (e.g., U.S. stock
markets).
2. Each class of shares represents interests in the same portfolio of
investments and is identical in all respects to each other class, except for
differences relating to distribution, service and other charges and expenses,
certain voting rights, differences relating to eligible investors, the
designation of each class of shares, conversion features and exchange
privileges. Expenses attributable to the fund, but not to a particular class of
shares, are borne by each class pro rata based on relative aggregate net assets
of the classes. Expenses directly attributable to a class of shares are borne by
that class of shares. Liabilities, including accruals of taxes and other expense
items attributable to particular share classes, are deducted from total assets
attributable to such share classes.
Fundamental Investors -- Page 34
<PAGE>
3. Net assets so obtained for each share class are then divided by the total
number of shares outstanding of that share class, and the result, rounded to the
nearest cent, is the net asset value per share for that share class.
TAXES AND DISTRIBUTIONS
FUND TAXATION -- The fund has elected to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code (the "Code"). A
regulated investment company qualifying under Subchapter M of the Code is
required to distribute to its shareholders at least 90% of its investment
company taxable income (including the excess of net short-term capital gain over
net long-term capital losses) and generally is not subject to federal income tax
to the extent that it distributes annually 100% of its investment company
taxable income and net realized capital gains in the manner required under the
Code. The fund intends to distribute annually all of its investment company
taxable income and net realized capital gains and therefore does not expect to
pay federal income tax, although in certain circumstances, the fund may
determine that it is in the interest of shareholders to distribute less than
that amount.
To be treated as a regulated investment company under Subchapter M of the Code,
the fund must also (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, net income from certain
publicly traded partnerships and gains from the sale or other disposition of
securities or foreign currencies, or other income (including, but not limited
to, gains from options, futures or forward contracts) derived with respect to
the business of investing in such securities or currencies, and (b) diversify
its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the
market value of the fund's assets is represented by cash, U.S. government
securities and securities of other regulated investment companies, and other
securities (for purposes of this calculation, generally limited in respect of
any one issuer, to an amount not greater than 5% of the market value of the
fund's assets and 10% of the outstanding voting securities of such issuer) and
(ii) not more than 25% of the value of its assets is invested in the securities
of (other than U.S. government securities or the securities of other regulated
investment companies) any one issuer; two or more issuers which the fund
controls and which are determined to be engaged in the same or similar trades or
businesses; or the securities of certain publicly traded partnerships.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (a) 98% of ordinary income (generally net investment income)
for the calendar year, (b) 98% of capital gain (both long-term and short-term)
for the one-year period ending on October 31 (as though the one-year period
ending on October 31 were the regulated investment company's taxable year) and
(c) the sum of any untaxed, undistributed net investment income and net capital
gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (a) amounts actually distributed
by the fund from its current year's ordinary income and capital gain net income
and (b) any amount on which the fund pays income tax during the periods
described above. Although the fund intends to distribute its net investment
income and net capital gains so as to avoid excise tax liability, the fund may
determine that it is in the interest of shareholders to distribute a lesser
amount.
Fundamental Investors -- Page 35
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The following information may not apply to you if you hold fund shares in a
tax-deferred account, such as a retirement plan or education savings account.
Please see your tax adviser for more information.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS -- Dividends and capital gain
distributions on fund shares will be reinvested in shares of the fund of the
same class, unless shareholders indicate in writing that they wish to receive
them in cash or in shares of the same class of other American Funds, as provided
in the prospectus. Dividends and capital gain distributions by 529 share classes
will be automatically reinvested.
Distributions of investment company taxable income and net realized capital
gains to shareholders will be taxable whether received in shares or in cash,
unless such shareholders are exempt from taxation. Shareholders electing to
receive distributions in the form of additional shares will have a cost basis
for federal income tax purposes in each share so received equal to the net asset
value of that share on the reinvestment date. Dividends and capital gain
distributions by the fund to a tax-deferred retirement plan account are not
taxable currently.
DIVIDENDS -- The fund intends to follow the practice of distributing
substantially all of its investment company taxable income. Investment
company taxable income generally includes dividends, interest, net
short-term capital gains in excess of net long-term capital losses, and
certain foreign currency gains, if any, less expenses and certain foreign
currency losses. To the extent the fund invests in stock of domestic and
certain foreign corporations and meets the applicable holding period
requirement, it may receive "qualified dividends". The fund will designate
the amount of "qualified dividends" to its shareholders in a notice sent
within 60 days of the close of its fiscal year and will report "qualified
dividends" to shareholders on Form 1099-DIV.
Under the Code, gains or losses attributable to fluctuations in exchange
rates that occur between the time the fund accrues receivables or
liabilities denominated in a foreign currency and the time the fund
actually collects such receivables, or pays such liabilities, generally are
treated as ordinary income or ordinary loss. Similarly, on disposition of
debt securities denominated in a foreign currency and on disposition of
certain futures contracts, forward contracts and options, gains or losses
attributable to fluctuations in the value of foreign currency between the
date of acquisition of the security or contract and the date of disposition
are also treated as ordinary gain or loss. These gains or losses, referred
to under the Code as Section 988 gains or losses, may increase or decrease
the amount of the fund's investment company taxable income to be
distributed to its shareholders as ordinary income.
If the fund invests in stock of certain passive foreign investment
companies, the fund may be subject to U.S. federal income taxation on a
portion of any "excess distribution" with respect to, or gain from the
disposition of, such stock. The tax would be determined by allocating such
distribution or gain ratably to each day of the fund's holding period for
the stock. The distribution or gain so allocated to any taxable year of the
fund, other than the taxable year of the excess distribution or
disposition, would be taxed to the fund at the highest ordinary income rate
in effect for such year, and the tax would be further increased by an
interest charge to reflect the value of the tax deferral deemed to have
resulted from the ownership of the foreign company's stock. Any amount of
distribution or gain allocated to the taxable year of the distribution or
disposition would be included in the
Fundamental Investors -- Page 36
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fund's investment company taxable income and, accordingly, would not be
taxable to the fund to the extent distributed by the fund as a dividend to
its shareholders.
To avoid such tax and interest, the fund intends to elect to treat these
securities as sold on the last day of its fiscal year and recognize any
gains for tax purposes at that time. Under this election, deductions for
losses are allowable only to the extent of any prior recognized gains, and
both gains and losses will be treated as ordinary income or loss. The fund
will be required to distribute any resulting income, even though it has not
sold the security and received cash to pay such distributions. Upon
disposition of these securities, any gain recognized is treated as ordinary
income and loss is treated as ordinary loss to the extent of any prior
recognized gain.
Dividends from domestic corporations are expected to comprise some portion
of the fund's gross income. To the extent that such dividends constitute
any of the fund's gross income, a portion of the income distributions of
the fund may be eligible for the deduction for dividends received by
corporations. Corporate shareholders will be informed of the portion of
dividends that so qualifies. The dividends-received deduction is reduced to
the extent that either the fund shares, or the underlying shares of stock
held by the fund, with respect to which dividends are received, are treated
as debt-financed under federal income tax law, and is eliminated if the
shares are deemed to have been held by the shareholder or the fund, as the
case may be, for less than 46 days during the 91-day period beginning on
the date that is 45 days before the date on which the shares become
ex-dividend. Capital gain distributions are not eligible for the
dividends-received deduction.
A portion of the difference between the issue price of zero coupon
securities and their face value (original issue discount) is considered to
be income to the fund each year, even though the fund will not receive cash
interest payments from these securities. This original issue discount
(imputed income) will comprise a part of the investment company taxable
income of the fund that must be distributed to shareholders in order to
maintain the qualification of the fund as a regulated investment company
and to avoid federal income taxation at the level of the fund.
The price of a bond purchased after its original issuance may reflect
market discount which, depending on the particular circumstances, may
affect the tax character and amount of income required to be recognized by
a fund holding the bond. In determining whether a bond is purchased with
market discount, certain de minimis rules apply.
Dividend and interest income received by the fund from sources outside the
United States may be subject to withholding and other taxes imposed by such
foreign jurisdictions. Tax conventions between certain countries and the
United States, however, may reduce or eliminate these foreign taxes. Some
foreign countries impose taxes on capital gains with respect to investments
by foreign investors.
CAPITAL GAIN DISTRIBUTIONS -- The fund also intends to follow the practice
of distributing the entire excess of net realized long-term capital gains
over net realized short-term capital losses. Net capital gains for a fiscal
year are computed by taking into account any capital loss carryforward of
the fund.
Fundamental Investors -- Page 37
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If any net long-term capital gains in excess of net short-term capital
losses are retained by the fund for reinvestment, requiring federal income
taxes to be paid thereon by the fund, the fund intends to elect to treat
such capital gains as having been distributed to shareholders. As a result,
each shareholder will report such capital gains as long-term capital gains
taxable to individual shareholders at a maximum 15% capital gains rate,
will be able to claim a pro rata share of federal income taxes paid by the
fund on such gains as a credit against personal federal income tax
liability, and will be entitled to increase the adjusted tax basis on fund
shares by the difference between a pro rata share of the retained gains and
such shareholder's related tax credit.
SHAREHOLDER TAXATION -- In January of each year, individual shareholders holding
fund shares in taxable accounts will receive a statement of the federal income
tax status of all distributions. Shareholders of the fund also may be subject to
state and local taxes on distributions received from the fund.
DIVIDENDS -- Fund dividends are taxable to shareholders as ordinary income.
All or a portion of a fund's dividend distribution may be a "qualified
dividend." If the fund meets the applicable holding period requirement, it
will distribute dividends derived from qualified corporation dividends to
shareholders as qualified dividends. Interest income from bonds and money
market instruments and nonqualified foreign dividends will be distributed
to shareholders as nonqualified fund dividends. The fund will report on
Form 1099-DIV the amount of each shareholder's dividend that may be treated
as a qualified dividend. If a shareholder other than a corporation meets
the requisite holding period requirement, qualified dividends are taxable
at a maximum rate of 15%.
CAPITAL GAINS -- Distributions of the excess of net long-term capital gains
over net short-term capital losses that the fund properly designates as
"capital gain dividends" generally will be taxable as long-term capital
gain. Regardless of the length of time the shares of the fund have been
held by a shareholder, a capital gain distribution by the fund is subject
to a maximum tax rate of 15%. Any loss realized upon the redemption of
shares held at the time of redemption for six months or less from the date
of their purchase will be treated as a long-term capital loss to the extent
of any amounts treated as distributions of long-term capital gains during
such six-month period.
Distributions by the fund result in a reduction in the net asset value of the
fund's shares. Investors should consider the tax implications of buying shares
just prior to a distribution. The price of shares purchased at that time
includes the amount of the forthcoming distribution. Those purchasing just prior
to a distribution will subsequently receive a partial return of their investment
capital upon payment of the distribution, which will be taxable to them.
Redemptions of shares, including exchanges for shares of other American Funds,
may result in federal, state and local tax consequences (gain or loss) to the
shareholder.
If a shareholder exchanges or otherwise disposes of shares of the fund within 90
days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder subsequently pays a reduced sales charge for
shares of the fund, or of a different fund, the sales charge previously incurred
in acquiring the fund's shares will not be taken into account (to the extent
such previous sales charges do not exceed the reduction in sales charges) for
the purposes of determining the amount of gain or loss on the exchange, but will
be treated as having been incurred in the acquisition of such other fund(s).
Fundamental Investors -- Page 38
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Any loss realized on a redemption or exchange of shares of the fund will be
disallowed to the extent substantially identical shares are reacquired within
the 61-day period beginning 30 days before and ending 30 days after the shares
are disposed of. Any loss disallowed under this rule will be added to the
shareholder's tax basis in the new shares purchased.
The fund will be required to report to the IRS all distributions of investment
company taxable income and capital gains as well as gross proceeds from the
redemption or exchange of fund shares, except in the case of certain exempt
shareholders. Under the backup withholding provisions of Section 3406 of the
Code, distributions of investment company taxable income and capital gains and
proceeds from the redemption or exchange of a regulated investment company may
be subject to backup withholding of federal income tax in the case of non-exempt
U.S. shareholders who fail to furnish the investment company with their taxpayer
identification numbers and with required certifications regarding their status
under the federal income tax law. Withholding may also be required if the fund
is notified by the IRS or a broker that the taxpayer identification number
furnished by the shareholder is incorrect or that the shareholder has previously
failed to report interest or dividend income. If the withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld.
The foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. persons (i.e., U.S. citizens and residents and
U.S. corporations, partnerships, trusts and estates). Each shareholder who is
not a U.S. person should consider the U.S. and foreign tax consequences of
ownership of shares of the fund, including the possibility that such a
shareholder may be subject to a U.S. withholding tax at a rate of 30% (or a
lower rate under an applicable income tax treaty) on dividend income received by
the shareholder.
Shareholders should consult their tax advisers about the application of federal,
state and local tax law in light of their particular situation.
Fundamental Investors -- Page 39
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UNLESS OTHERWISE NOTED, ALL REFERENCES IN THE FOLLOWING PAGES TO CLASS A, B, C
OR F-1 SHARES ALSO REFER TO THE CORRESPONDING CLASS 529-A, 529-B, 529-C OR
529-F-1 SHARES. CLASS 529 SHAREHOLDERS SHOULD ALSO REFER TO THE APPLICABLE
PROGRAM DESCRIPTION FOR INFORMATION ON POLICIES AND SERVICES SPECIFICALLY
RELATING TO THESE ACCOUNTS. SHAREHOLDERS HOLDING SHARES THROUGH AN ELIGIBLE
RETIREMENT PLAN SHOULD CONTACT THEIR PLAN'S ADMINISTRATOR OR RECORDKEEPER FOR
INFORMATION REGARDING PURCHASES, SALES AND EXCHANGES.
PURCHASE AND EXCHANGE OF SHARES
PURCHASES BY INDIVIDUALS -- As described in the prospectus, you may generally
open an account and purchase fund shares by contacting a financial adviser or
investment dealer authorized to sell the fund's shares. You may make investments
by any of the following means:
CONTACTING YOUR FINANCIAL ADVISER -- Deliver or mail a check to your
financial adviser.
BY MAIL -- for initial investments, you may mail a check, made payable to
the fund, directly to the address indicated on the account application.
Please indicate an investment dealer on the account application. You may
make additional investments by filling out the "Account Additions" form at
the bottom of a recent account statement and mailing the form, along with a
check made payable to the fund, using the envelope provided with your
account statement.
The amount of time it takes for us to receive regular U.S. postal mail may
vary and there is no assurance that we will receive such mail on the day
you expect. Mailing addresses for regular U.S. postal mail can be found in
the prospectus. To send investments or correspondence to us via overnight
mail or courier service, use either of the following addresses:
American Funds
8332 Woodfield Crossing Blvd.
Indianapolis, IN 46240-2482
American Funds
5300 Robin Hood Rd.
Norfolk, VA 23513-2407
BY TELEPHONE -- using the American FundsLine. Please see the "Shareholder
account services and privileges" section of this statement of additional
information for more information regarding this service.
BY INTERNET -- using americanfunds.com. Please see the "Shareholder account
services and privileges" section of this statement of additional
information for more information regarding this service.
BY WIRE -- If you are making a wire transfer, instruct your bank to wire
funds to:
Wells Fargo Bank
ABA Routing No. 121000248
Account No. 4600-076178
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Your bank should include the following information when wiring funds:
For credit to the account of:
American Funds Service Company
(fund's name)
For further credit to:
(shareholder's fund account number)
(shareholder's name)
You may contact American Funds Service Company at 800/421-0180 if you have
questions about making wire transfers.
OTHER PURCHASE INFORMATION -- The Principal Underwriter will not knowingly sell
shares of the fund directly or indirectly to any person or entity, where, after
the sale, such person or entity would own beneficially directly or indirectly
more than 3.0% of the outstanding shares of the fund without the consent of a
majority of the fund's board.
Class 529 shares may be purchased only through CollegeAmerica by investors
establishing qualified higher education savings accounts. Class 529-E shares may
be purchased only by investors participating in CollegeAmerica through an
eligible employer plan. Class R-5 shares are also available to clients of the
Personal Investment Management group of Capital Guardian Trust Company who do
not have an intermediary associated with their accounts and without regard to
the $1 million purchase minimum. In addition, the American Funds state
tax-exempt funds are qualified for sale only in certain jurisdictions, and
tax-exempt funds in general should not serve as retirement plan investments. The
fund and the Principal Underwriter reserve the right to reject any purchase
order.
PURCHASE MINIMUMS AND MAXIMUMS -- All investments are subject to the purchase
minimums and maximums described in the prospectus. As noted in the prospectus,
purchase minimums may be waived or reduced in certain cases.
In the case of American Funds non-tax-exempt funds, the initial purchase minimum
of $25 may be waived for the following account types:
. Payroll deduction retirement plan accounts (such as, but not limited
to, 403(b), 401(k), SIMPLE IRA, SARSEP and deferred compensation plan
accounts); and
. Employer-sponsored CollegeAmerica accounts.
The following account types may be established without meeting the initial
purchase minimum:
. Retirement accounts that are funded with employer contributions; and
. Accounts that are funded with monies set by court decree.
The following account types may be established without meeting the initial
purchase minimum, but shareholders wishing to invest in two or more funds must
meet the normal initial purchase minimum of each fund:
Fundamental Investors -- Page 41
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. Accounts that are funded with (a) transfers of assets, (b) rollovers
from retirement plans, (c) rollovers from 529 college savings plans or
(d) required minimum distribution automatic exchanges; and
. American Funds money market fund accounts registered in the name of
clients of Capital Guardian Trust Company's Personal Investment
Management group.
Certain accounts held on the fund's books, known as omnibus accounts, contain
multiple underlying accounts that are invested in shares of the fund. These
underlying accounts are maintained by entities such as financial intermediaries
and are subject to the applicable initial purchase minimums as described in the
prospectus and this statement of additional information. However, in the case
where the entity maintaining these accounts aggregates the accounts' purchase
orders for fund shares, such accounts are not required to meet the fund's
minimum amount for subsequent purchases.
EXCHANGES -- You may only exchange shares into other American Funds within the
same share class. However, exchanges from Class A shares of The Cash Management
Trust of America may be made to Class B or C shares of other American Funds for
dollar cost averaging purposes. Exchanges are not permitted from Class A shares
of The Cash Management Trust of America to Class B or C shares of Intermediate
Bond Fund of America, Limited Term Tax-Exempt Bond Fund of America and
Short-Term Bond Fund of America. Exchange purchases are subject to the minimum
investment requirements of the fund purchased and no sales charge generally
applies. However, exchanges of shares from American Funds money market funds are
subject to applicable sales charges on the fund being purchased, unless the
money market fund shares were acquired by an exchange from a fund having a sales
charge, or by reinvestment or cross-reinvestment of dividends or capital gain
distributions. Exchanges of Class F shares generally may only be made through
fee-based programs of investment firms that have special agreements with the
fund's distributor and certain registered investment advisers.
You may exchange shares of other classes by contacting the Transfer Agent, by
contacting your investment dealer or financial adviser, by using American
FundsLine or americanfunds.com, or by telephoning 800/421-0180 toll-free, or
faxing (see "American Funds Service Company service areas" in the prospectus for
the appropriate fax numbers) the Transfer Agent. For more information, see
"Shareholder account services and privileges" in this statement of additional
information. THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES
AND PURCHASES.
Shares held in employer-sponsored retirement plans may be exchanged into other
American Funds by contacting your plan administrator or recordkeeper. Exchange
redemptions and purchases are processed simultaneously at the share prices next
determined after the exchange order is received (see "Price of shares" in this
statement of additional information).
FREQUENT TRADING OF FUND SHARES -- As noted in the prospectus, certain
redemptions may trigger a purchase block lasting 30 calendar days under the
fund's "purchase blocking policy." Under this policy, systematic redemptions
will not trigger a purchase block and systematic purchases will not be
prevented. For purposes of this policy, systematic redemptions include, for
example, regular periodic automatic redemptions and statement of intention
escrow share redemptions. Systematic purchases include, for example, regular
periodic automatic purchases and automatic reinvestments of dividends and
capital gain distributions.
Fundamental Investors -- Page 42
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OTHER POTENTIALLY ABUSIVE ACTIVITY -- In addition to implementing purchase
blocks, American Funds Service Company will monitor for other types of activity
that could potentially be harmful to the American Funds - for example,
short-term trading activity in multiple funds. When identified, American Funds
Service Company will request that the shareholder discontinue the activity. If
the activity continues, American Funds Service Company will freeze the
shareholder account to prevent all activity other than redemptions of fund
shares.
MOVING BETWEEN SHARE CLASSES
If you wish to "move" your investment between share classes (within the
same fund or between different funds), we generally will process your
request as an exchange of the shares you currently hold for shares in the
new class or fund. Below is more information about how sales charges are
handled for various scenarios.
EXCHANGING CLASS B SHARES FOR CLASS A SHARES -- If you exchange Class B
shares for Class A shares during the contingent deferred sales charge
period you are responsible for paying any applicable deferred sales charges
attributable to those Class B shares, but you will not be required to pay a
Class A sales charge. If, however, you exchange your Class B shares for
Class A shares after the contingent deferred sales charge period, you are
responsible for paying any applicable Class A sales charges.
EXCHANGING CLASS C SHARES FOR CLASS A SHARES -- If you exchange Class C
shares for Class A shares, you are still responsible for paying any Class C
contingent deferred sales charges and applicable Class A sales charges.
EXCHANGING CLASS C SHARES FOR CLASS F SHARES -- If you are part of a
qualified fee-based program and you wish to exchange your Class C shares
for Class F shares to be held in the program, you are still responsible for
paying any applicable Class C contingent deferred sales charges.
EXCHANGING CLASS F SHARES FOR CLASS A SHARES -- You can exchange Class F
shares held in a qualified fee-based program for Class A shares without
paying an initial Class A sales charge if all of the following requirements
are met: (a) you are leaving or have left the fee-based program, (b) you
have held the Class F shares in the program for at least one year, and (c)
you notify American Funds Service Company of your request. If you have
already redeemed your Class F shares, the foregoing requirements apply and
you must purchase Class A shares within 90 days after redeeming your Class
F shares to receive the Class A shares without paying an initial Class A
sales charge.
EXCHANGING CLASS A SHARES FOR CLASS F SHARES -- If you are part of a
qualified fee-based program and you wish to exchange your Class A shares
for Class F shares to be held in the program, any Class A sales charges
(including contingent deferred sales charges) that you paid or are payable
will not be credited back to your account.
EXCHANGING CLASS A SHARES FOR CLASS R SHARES -- Provided it is eligible to
invest in Class R shares, a retirement plan currently invested in Class A
shares may exchange its shares for Class R shares. Any Class A sales
charges that the retirement plan previously paid will not be credited back
to the plan's account.
Fundamental Investors -- Page 43
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EXCHANGING CLASS F-1 SHARES FOR CLASS F-2 SHARES -- If you are part of a
qualified fee-based program that offers Class F-2 shares, you may exchange
your Class F-1 shares for Class F-2 shares to be held in the program.
MOVING BETWEEN OTHER SHARE CLASSES -- If you desire to move your investment
between share classes and the particular scenario is not described in this
statement of additional information, please contact American Funds Service
Company at 800/421-0180 for more information.
NON-REPORTABLE TRANSACTIONS -- Automatic conversions described in the
prospectus will be non-reportable for tax purposes. In addition, except in
the case of a movement between a 529 share class and a non-529 share class,
an exchange of shares from one share class of a fund to another share class
of the same fund will be treated as a non-reportable exchange for tax
purposes, provided that the exchange request is received in writing by
American Funds Service Company and processed as a single transaction.
SALES CHARGES
CLASS A PURCHASES
PURCHASES BY CERTAIN 403(B) PLANS
A 403(b) plan may not invest in Class A, B or C shares on or after January
1, 2009, unless such plan was invested in Class A, B or C shares prior to
that date.
Participant accounts of a 403(b) plan that were treated as an
individual-type plan for sales charge purposes prior to January 1, 2009,
may continue to be treated as accounts of an individual-type plan for sales
charge purposes. Participant accounts of a 403(b) plan that were treated as
an employer-sponsored plan for sales charge purposes prior to January 1,
2009, may continue to be treated as accounts of an employer-sponsored plan
for sales charge purposes. Participant accounts of a 403(b) plan that is
established on or after January 1, 2009 are treated as accounts of an
employer-sponsored plan for sales charge purposes.
PURCHASES BY SEP PLANS AND SIMPLE IRA PLANS
Participant accounts in a Simplified Employee Pension (SEP) plan or a
Savings Incentive Match Plan for Employees of Small Employers IRA (SIMPLE
IRA) plan will be aggregated together for Class A sales charge purposes if
the SEP plan or SIMPLE IRA plan was established after November 15, 2004 by
an employer adopting a prototype plan produced by American Funds
Distributors, Inc. In the case where the employer adopts any other plan
(including, but not limited to, an IRS model agreement), each participant's
account in the plan will be aggregated with the participant's own personal
investments that qualify under the aggregation policy. A SEP plan or SIMPLE
IRA plan with a certain method of aggregating participant accounts as of
November 15, 2004 may continue with that method so long as the employer has
not modified the plan document since that date.
Fundamental Investors -- Page 44
<PAGE>
OTHER PURCHASES
Pursuant to a determination of eligibility by a vice president or more
senior officer of the Capital Research and Management Company Fund
Administration Unit, or by his or her designee, Class A shares of the
American Funds stock, stock/bond and bond funds may be sold at net asset
value to:
(1) current or retired directors, trustees, officers and advisory board
members of, and certain lawyers who provide services to, the funds
managed by Capital Research and Management Company, current or retired
employees of Washington Management Corporation, current or retired
employees and partners of The Capital Group Companies, Inc. and its
affiliated companies, certain family members of the above persons, and
trusts or plans primarily for such persons;
(2) currently registered representatives and assistants directly employed
by such representatives, retired registered representatives with
respect to accounts established while active, or full-time employees
(collectively, "Eligible Persons") (and their (a) spouses or
equivalents if recognized under local law, (b) parents and children,
including parents and children in step and adoptive relationships,
sons-in-law and daughters-in-law, and (c) parents-in-law, if the
Eligible Persons or the spouses, children or parents of the Eligible
Persons are listed in the account registration with the
parents-in-law) of dealers who have sales agreements with the
Principal Underwriter (or who clear transactions through such
dealers), plans for the dealers, and plans that include as
participants only the Eligible Persons, their spouses, parents and/or
children;
(3) currently registered investment advisers ("RIAs") and assistants
directly employed by such RIAs, retired RIAs with respect to accounts
established while active, or full-time employees (collectively,
"Eligible Persons") (and their (a) spouses or equivalents if
recognized under local law, (b) parents and children, including
parents and children in step and adoptive relationships, sons-in-law
and daughters-in-law and (c) parents-in-law, if the Eligible Persons
or the spouses, children or parents of the Eligible Persons are listed
in the account registration with the parents-in-law) of RIA firms that
are authorized to sell shares of the funds, plans for the RIA firms,
and plans that include as participants only the Eligible Persons,
their spouses, parents and/or children;
(4) companies exchanging securities with the fund through a merger,
acquisition or exchange offer;
(5) insurance company separate accounts;
(6) accounts managed by subsidiaries of The Capital Group Companies, Inc.;
(7) The Capital Group Companies, Inc., its affiliated companies and
Washington Management Corporation;
(8) an individual or entity with a substantial business relationship with
The Capital Group Companies, Inc. or its affiliates, or an individual
or entity related or relating to such individual or entity;
(9) wholesalers and full-time employees directly supporting wholesalers
involved in the distribution of insurance company separate accounts
whose underlying
Fundamental Investors -- Page 45
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investments are managed by any affiliate of The Capital Group
Companies, Inc.; and
(10) full-time employees of banks that have sales agreements with the
Principal Underwriter, who are solely dedicated to directly supporting
the sale of mutual funds.
Shares are offered at net asset value to these persons and organizations
due to anticipated economies in sales effort and expense. Once an account
is established under this net asset value privilege, additional investments
can be made at net asset value for the life of the account.
TRANSFERS TO COLLEGEAMERICA -- A transfer from the Virginia Prepaid
Education Program/SM/ or the Virginia Education Savings Trust/SM/ to a
CollegeAmerica account will be made with no sales charge. No commission
will be paid to the dealer on such a transfer.
MOVING BETWEEN ACCOUNTS -- Investments in certain account types may be moved to
other account types without incurring additional Class A sales charges. These
transactions include, for example:
. redemption proceeds from a non-retirement account (for example, a
joint tenant account) used to purchase fund shares in an IRA or other
individual-type retirement account;
. required minimum distributions from an IRA or other individual-type
retirement account used to purchase fund shares in a non-retirement
account; and
. death distributions paid to a beneficiary's account that are used by
the beneficiary to purchase fund shares in a different account.
LOAN REPAYMENTS -- Repayments on loans taken from a retirement plan or an
individual-type retirement account are not subject to sales charges if American
Funds Service Company is notified of the repayment.
DEALER COMMISSIONS AND COMPENSATION -- Commissions (up to 1.00%) are paid to
dealers who initiate and are responsible for certain Class A share purchases not
subject to initial sales charges. These purchases consist of purchases of $1
million or more, purchases by employer-sponsored defined contribution-type
retirement plans investing $1 million or more or with 100 or more eligible
employees, and purchases made at net asset value by certain retirement plans,
endowments and foundations with assets of $50 million or more. Commissions on
such investments (other than IRA rollover assets that roll over at no sales
charge under the fund's IRA rollover policy as described in the prospectus) are
paid to dealers at the following rates: 1.00% on amounts of less than $4
million, 0.50% on amounts of at least $4 million but less than $10 million and
0.25% on amounts of at least $10 million. Commissions are based on cumulative
investments over the life of the account with no adjustment for redemptions,
transfers, or market declines. For example, if a shareholder has accumulated
investments in excess of $4 million (but less than $10 million) and subsequently
redeems all or a portion of the account(s), purchases following the redemption
will generate a dealer commission of 0.50%.
Fundamental Investors -- Page 46
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A dealer concession of up to 1% may be paid by the fund under its Class A plan
of distribution to reimburse the Principal Underwriter in connection with dealer
and wholesaler compensation paid by it with respect to investments made with no
initial sales charge.
SALES CHARGE REDUCTIONS AND WAIVERS
REDUCING YOUR CLASS A SALES CHARGE -- As described in the prospectus, there are
various ways to reduce your sales charge when purchasing Class A shares.
Additional information about Class A sales charge reductions is provided below.
STATEMENT OF INTENTION -- By establishing a statement of intention (the
"Statement"), you enter into a nonbinding commitment to purchase shares of
the American Funds (excluding money market funds) over a 13-month period
and receive the same sales charge (expressed as a percentage of your
purchases) as if all shares had been purchased at once.
The Statement period starts on the date on which your first purchase made
toward satisfying the Statement is processed. The market value of your
existing holdings eligible to be aggregated (see below) as of the day
immediately before the start of the Statement period may be credited toward
satisfying the Statement.
You may revise the commitment you have made in your Statement upward at any
time during the Statement period. If your prior commitment has not been met
by the time of the revision, the Statement period during which purchases
must be made will remain unchanged. Purchases made from the date of the
revision will receive the reduced sales charge, if any, resulting from the
revised Statement. If your prior commitment has been met by the time of the
revision, your original Statement will be considered met and a new
Statement will be established.
The Statement will be considered completed if the shareholder dies within
the 13-month Statement period. Commissions to dealers will not be adjusted
or paid on the difference between the Statement amount and the amount
actually invested before the shareholder's death.
When a shareholder elects to use a Statement, shares equal to 5% of the
dollar amount specified in the Statement may be held in escrow in the
shareholder's account out of the initial purchase (or subsequent purchases,
if necessary) by the Transfer Agent. All dividends and any capital gain
distributions on shares held in escrow will be credited to the
shareholder's account in shares (or paid in cash, if requested). If the
intended investment is not completed within the specified Statement period,
the purchaser may be required to remit to the Principal Underwriter the
difference between the sales charge actually paid and the sales charge
which would have been paid if the total of such purchases had been made at
a single time. Any dealers assigned to the shareholder's account at the
time a purchase was made during the Statement period will receive a
corresponding commission adjustment if appropriate. If the difference is
not paid by the close of the Statement period, the appropriate number of
shares held in escrow will be redeemed to pay such difference. If the
proceeds from this redemption are inadequate, the purchaser may be liable
to the Principal Underwriter for the balance still outstanding.
Fundamental Investors -- Page 47
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Certain payroll deduction retirement plans purchasing Class A shares under
a Statement on or before November 12, 2006, may continue to purchase Class
A shares at the sales charge determined by that particular Statement until
the plans' values reach the amounts specified in their Statements. Upon
reaching such amounts, the Statements for these plans will be deemed
completed and will terminate. After such termination, these plans are
eligible for additional sales charge reductions by meeting the criteria
under the fund's rights of accumulation policy.
In addition, if you currently have individual holdings in American Legacy
variable annuity contracts or variable life insurance policies that were
established on or before March 31, 2007, you may continue to apply
purchases under such contracts and policies to a Statement.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms and those in the prospectus with
their first purchase.
AGGREGATION -- Qualifying investments for aggregation include those made by
you and your "immediate family" as defined in the prospectus, if all
parties are purchasing shares for their own accounts and/or:
. individual-type employee benefit plans, such as an IRA,
single-participant Keogh-type plan, or a participant account of a
403(b) plan that is treated as an individual-type plan for sales
charge purposes (see "Purchases by certain 403(b) plans" under "Sales
charges" in this statement of additional information);
. SEP plans and SIMPLE IRA plans established after November 15, 2004 by
an employer adopting any plan document other than a prototype plan
produced by American Funds Distributors, Inc.;
. business accounts solely controlled by you or your immediate family
(for example, you own the entire business);
. trust accounts established by you or your immediate family (for trusts
with only one primary beneficiary, upon the trustor's death the trust
account may be aggregated with such beneficiary's own accounts; for
trusts with multiple primary beneficiaries, upon the trustor's death
the trustees of the trust may instruct American Funds Service Company
to establish separate trust accounts for each primary beneficiary;
each primary beneficiary's separate trust account may then be
aggregated with such beneficiary's own accounts);
. endowments or foundations established and controlled by you or your
immediate family; or
. 529 accounts, which will be aggregated at the account owner level
(Class 529-E accounts may only be aggregated with an eligible employer
plan).
Individual purchases by a trustee(s) or other fiduciary(ies) may also be
aggregated if the investments are:
. for a single trust estate or fiduciary account, including employee
benefit plans other than the individual-type employee benefit plans
described above;
Fundamental Investors -- Page 48
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. made for two or more employee benefit plans of a single employer or of
affiliated employers as defined in the 1940 Act, excluding the
individual-type employee benefit plans described above;
. for a diversified common trust fund or other diversified pooled
account not specifically formed for the purpose of accumulating fund
shares;
. for nonprofit, charitable or educational organizations, or any
endowments or foundations established and controlled by such
organizations, or any employer-sponsored retirement plans established
for the benefit of the employees of such organizations, their
endowments, or their foundations;
. for participant accounts of a 403(b) plan that is treated as an
employer-sponsored plan for sales charge purposes (see "Purchases by
certain 403(b) plans" under "Sales charges" in this statement of
additional information), or made for participant accounts of two or
more such plans, in each case of a single employer or affiliated
employers as defined in the 1940 Act; or
. for a SEP or SIMPLE IRA plan established after November 15, 2004 by an
employer adopting a prototype plan produced by American Funds
Distributors, Inc.
Purchases made for nominee or street name accounts (securities held in the
name of an investment dealer or another nominee such as a bank trust
department instead of the customer) may not be aggregated with those made
for other accounts and may not be aggregated with other nominee or street
name accounts unless otherwise qualified as described above.
CONCURRENT PURCHASES -- As described in the prospectus, you may reduce your
Class A sales charge by combining purchases of all classes of shares in the
American Funds, as well as holdings in Endowments and applicable holdings
in the American Funds Target Date Retirement Series. Shares of money market
funds purchased through an exchange, reinvestment or cross-reinvestment
from a fund having a sales charge also qualify. However, direct purchases
of American Funds money market funds are excluded. If you currently have
individual holdings in American Legacy variable annuity contracts or
variable life insurance policies that were established on or before March
31, 2007, you may continue to combine purchases made under such contracts
and policies to reduce your Class A sales charge.
RIGHTS OF ACCUMULATION -- Subject to the limitations described in the
aggregation policy, you may take into account your accumulated holdings in
all share classes of the American Funds, as well as your holdings in
Endowments and applicable holdings in the American Funds Target Date
Retirement Series, to determine your sales charge on investments in
accounts eligible to be aggregated. Direct purchases of American Funds
money market funds are excluded. Subject to your investment dealer's or
recordkeeper's capabilities, your accumulated holdings will be calculated
as the higher of (a) the current value of your existing holdings (the
"market value") or (b) the amount you invested (including reinvested
dividends and capital gains, but excluding capital appreciation) less any
withdrawals (the "cost value"). Depending on the entity on whose books your
account is held, the value of your holdings in that account may not be
eligible for calculation at cost value. For example, accounts held in
nominee or street name may not be eligible for
Fundamental Investors -- Page 49
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calculation at cost value and instead may be calculated at market value for
purposes of rights of accumulation.
The value of all of your holdings in accounts established in calendar year
2005 or earlier will be assigned an initial cost value equal to the market
value of those holdings as of the last business day of 2005. Thereafter,
the cost value of such accounts will increase or decrease according to
actual investments or withdrawals. You must contact your financial adviser
or American Funds Service Company if you have additional information that
is relevant to the calculation of the value of your holdings.
When determining your American Funds Class A sales charge, if your
investment is not in an employer-sponsored retirement plan, you may also
continue to take into account the market value (as of the day prior to your
American Funds investment) of your individual holdings in various American
Legacy variable annuity contracts and variable life insurance policies that
were established on or before March 31, 2007. An employer-sponsored
retirement plan may also continue to take into account the market value of
its investments in American Legacy Retirement Investment Plans that were
established on or before March 31, 2007.
You may not purchase Class B or 529-B shares if your combined American
Funds and applicable American Legacy holdings cause you to be eligible to
purchase Class A or 529-A shares at the $100,000 or higher sales charge
discount rate. In addition, you may not purchase Class C or 529-C shares if
such combined holdings cause you to be eligible to purchase Class A or
529-A shares at the $1 million or more sales charge discount rate (i.e. at
net asset value).
If you make a gift of American Funds Class A shares, upon your request, you
may purchase the shares at the sales charge discount allowed under rights
of accumulation of all of your American Funds and applicable American
Legacy accounts.
RIGHT OF REINVESTMENT -- As described in the prospectus, certain
transactions may be eligible for investment without a sales charge pursuant
to the fund's right of reinvestment policy. Recent legislation suspended
required minimum distributions from individual retirement accounts and
employer-sponsored retirement plan accounts for the 2009 tax year. Given
this suspension, proceeds from an automatic withdrawal plan to satisfy a
required minimum distribution may be invested without a sales charge for
the 2009 tax year, or any subsequent period, to the extent such legislation
is extended. This policy is subject to any restrictions regarding the
investment of proceeds from a required minimum distribution that may be
established by the transfer agent.
CDSC WAIVERS FOR CLASS A, B AND C SHARES -- As noted in the prospectus, a
contingent deferred sales charge ("CDSC") may be waived for redemptions due to
death or postpurchase disability of a shareholder (this generally excludes
accounts registered in the names of trusts and other entities). In the case of
joint tenant accounts, if one joint tenant dies, a surviving joint tenant, at
the time he or she notifies the Transfer Agent of the other joint tenant's death
and removes the decedent's name from the account, may redeem shares from the
account without incurring a CDSC. Redemptions made after the Transfer Agent is
notified of the death of a joint tenant will be subject to a CDSC.
In addition, a CDSC may be waived for the following types of transactions, if
together they do not exceed 12% of the value of an "account" (defined below)
annually (the "12% limit"):
Fundamental Investors -- Page 50
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. Required minimum distributions taken from retirement accounts upon the
shareholder's attainment of age 70-1/2 (required minimum distributions
that continue to be taken by the beneficiary(ies) after the account
owner is deceased also qualify for a waiver).
. Redemptions through an automatic withdrawal plan ("AWP") (see
"Automatic withdrawals" under "Shareholder account services and
privileges" in this statement of additional information). For each AWP
payment, assets that are not subject to a CDSC, such as appreciation
on shares and shares acquired through reinvestment of dividends and/or
capital gain distributions, will be redeemed first and will count
toward the 12% limit. If there is an insufficient amount of assets not
subject to a CDSC to cover a particular AWP payment, shares subject to
the lowest CDSC will be redeemed next until the 12% limit is reached.
Any dividends and/or capital gain distributions taken in cash by a
shareholder who receives payments through an AWP will also count
toward the 12% limit. In the case of an AWP, the 12% limit is
calculated at the time an automatic redemption is first made, and is
recalculated at the time each additional automatic redemption is made.
Shareholders who establish an AWP should be aware that the amount of a
payment not subject to a CDSC may vary over time depending on
fluctuations in the value of their accounts. This privilege may be
revised or terminated at any time.
For purposes of this paragraph, "account" means:
. in the case of Class A shares, your investment in Class A shares of
all American Funds (investments representing direct purchases of
American Funds money market funds are excluded);
. in the case of Class B shares, your investment in Class B shares of
the particular fund from which you are making the redemption; and
. in the case of Class C shares, your investment in Class C shares of
the particular fund from which you are making the redemption.
CDSC waivers are allowed only in the cases listed here and in the prospectus.
For example, CDSC waivers will not be allowed on redemptions of Class 529-B and
529-C shares due to termination of CollegeAmerica; a determination by the
Internal Revenue Service that CollegeAmerica does not qualify as a qualified
tuition program under the Code; proposal or enactment of law that eliminates or
limits the tax-favored status of CollegeAmerica; or elimination of the fund by
the Virginia College Savings Plan as an option for additional investment within
CollegeAmerica.
SELLING SHARES
The methods for selling (redeeming) shares are described more fully in the
prospectus. If you wish to sell your shares by contacting American Funds Service
Company directly, any such request must be signed by the registered
shareholders. To contact American Funds Service Company via overnight mail or
courier service, see "Purchase and exchange of shares."
A signature guarantee may be required for certain redemptions. In such an event,
your signature may be guaranteed by a domestic stock exchange or the Financial
Industry Regulatory Authority, bank, savings association or credit union that is
an eligible guarantor institution. The Transfer Agent reserves the right to
require a signature guarantee on any redemptions.
Fundamental Investors -- Page 51
<PAGE>
Additional documentation may be required for sales of shares held in corporate,
partnership or fiduciary accounts. You must include with your written request
any shares you wish to sell that are in certificate form.
If you sell Class A, B or C shares and request a specific dollar amount to be
sold, we will sell sufficient shares so that the sale proceeds, after deducting
any applicable CDSC, equals the dollar amount requested.
Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 10
business days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the 1940 Act), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.
You may request that redemption proceeds of $1,000 or more from money market
funds be wired to your bank by writing American Funds Service Company. A
signature guarantee is required on all requests to wire funds.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
The following services and privileges are generally available to all
shareholders. However, certain services and privileges described in the
prospectus and this statement of additional information may not be available for
Class 529 shareholders or if your account is held with an investment dealer or
through an employer-sponsored retirement plan.
AUTOMATIC INVESTMENT PLAN -- An automatic investment plan enables you to make
monthly or quarterly investments in the American Funds through automatic debits
from your bank account. To set up a plan, you must fill out an account
application and specify the amount that you would like to invest and the date on
which you would like your investments to occur. The plan will begin within 30
days after your account application is received. Your bank account will be
debited on the day or a few days before your investment is made, depending on
the bank's capabilities. The Transfer Agent will then invest your money into the
fund you specified on or around the date you specified. If the date you
specified falls on a weekend or holiday, your money will be invested on the
following business day. However, if the following business day falls in the next
month, your money will be invested on the business day immediately preceding the
weekend or holiday. If your bank account cannot be debited due to insufficient
funds, a stop-payment or the closing of the account, the plan may be terminated
and the related investment reversed. You may change the amount of the investment
or discontinue the plan at any time by contacting the Transfer Agent.
AUTOMATIC REINVESTMENT -- Dividends and capital gain distributions are
reinvested in additional shares of the same class and fund at net asset value
unless you indicate otherwise on the account application. You also may elect to
have dividends and/or capital gain distributions paid in cash by informing the
fund, the Transfer Agent or your investment dealer. Dividends and capital gain
distributions paid to retirement plan shareholders or shareholders of the 529
share classes will be automatically reinvested.
Fundamental Investors -- Page 52
<PAGE>
If you have elected to receive dividends and/or capital gain distributions in
cash, and the postal or other delivery service is unable to deliver checks to
your address of record, or you do not respond to mailings from American Funds
Service Company with regard to uncashed distribution checks, your distribution
option may be automatically converted to having all dividends and other
distributions reinvested in additional shares.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS -- For all share classes,
except the 529 classes of shares, you may cross-reinvest dividends and capital
gains (distributions) into other American Funds in the same share class at net
asset value, subject to the following conditions:
(1) the aggregate value of your account(s) in the fund(s) paying distributions
equals or exceeds $5,000 (this is waived if the value of the account in the fund
receiving the distributions equals or exceeds that fund's minimum initial
investment requirement);
(2) if the value of the account of the fund receiving distributions is below
the minimum initial investment requirement, distributions must be automatically
reinvested; and
(3) if you discontinue the cross-reinvestment of distributions, the value of
the account of the fund receiving distributions must equal or exceed the minimum
initial investment requirement. If you do not meet this requirement within 90
days of notification, the fund has the right to automatically redeem the
account.
AUTOMATIC EXCHANGES -- For all share classes, you may automatically exchange
shares of the same class in amounts of $50 or more among any of the American
Funds on any day (or preceding business day if the day falls on a nonbusiness
day) of each month you designate.
AUTOMATIC WITHDRAWALS -- Depending on the type of account, for all share classes
except R shares, you may automatically withdraw shares from any of the American
Funds. You can make automatic withdrawals of $50 or more. You can designate the
day of each period for withdrawals and request that checks be sent to you or
someone else. Withdrawals may also be electronically deposited to your bank
account. The Transfer Agent will withdraw your money from the fund you specify
on or around the date you specify. If the date you specified falls on a weekend
or holiday, the redemption will take place on the previous business day.
However, if the previous business day falls in the preceding month, the
redemption will take place on the following business day after the weekend or
holiday. You should consult with your adviser or intermediary to determine if
your account is eligible for automatic withdrawals.
Withdrawal payments are not to be considered as dividends, yield or income.
Generally, automatic investments may not be made into a shareholder account from
which there are automatic withdrawals. Withdrawals of amounts exceeding
reinvested dividends and distributions and increases in share value would reduce
the aggregate value of the shareholder's account. The Transfer Agent arranges
for the redemption by the fund of sufficient shares, deposited by the
shareholder with the Transfer Agent, to provide the withdrawal payment
specified.
Redemption proceeds from an automatic withdrawal plan are not eligible for
reinvestment without a sales charge.
ACCOUNT STATEMENTS -- Your account is opened in accordance with your
registration instructions. Transactions in the account, such as additional
investments, will be reflected on regular confirmation statements from the
Transfer Agent. Dividend and capital gain
Fundamental Investors -- Page 53
<PAGE>
reinvestments, purchases through automatic investment plans and certain
retirement plans, as well as automatic exchanges and withdrawals will be
confirmed at least quarterly.
AMERICAN FUNDSLINE AND AMERICANFUNDS.COM -- You may check your share balance,
the price of your shares or your most recent account transaction; redeem shares
(up to $75,000 per American Funds shareholder each day) from nonretirement plan
accounts; or exchange shares around the clock with American FundsLine or using
americanfunds.com. To use American FundsLine, call 800/325-3590 from a
TouchTone(TM) telephone. Redemptions and exchanges through American FundsLine
and americanfunds.com are subject to the conditions noted above and in
"Telephone and Internet purchases, redemptions and exchanges" below. You will
need your fund number (see the list of the American Funds under "General
information -- fund numbers"), personal identification number (generally the
last four digits of your Social Security number or other tax identification
number associated with your account) and account number.
Generally, all shareholders are automatically eligible to use these services.
However, if you are not currently authorized to do so, you may complete an
American FundsLink Authorization Form. Once you establish this privilege, you,
your financial adviser or any person with your account information may use these
services.
TELEPHONE AND INTERNET PURCHASES, REDEMPTIONS AND EXCHANGES -- By using the
telephone (including American FundsLine) or the Internet (including
americanfunds.com), or fax purchase, redemption and/or exchange options, you
agree to hold the fund, the Transfer Agent, any of its affiliates or mutual
funds managed by such affiliates, and each of their respective directors,
trustees, officers, employees and agents harmless from any losses, expenses,
costs or liabilities (including attorney fees) that may be incurred in
connection with the exercise of these privileges. Generally, all shareholders
are automatically eligible to use these services. However, you may elect to opt
out of these services by writing the Transfer Agent (you may also reinstate them
at any time by writing the Transfer Agent). If the Transfer Agent does not
employ reasonable procedures to confirm that the instructions received from any
person with appropriate account information are genuine, it and/or the fund may
be liable for losses due to unauthorized or fraudulent instructions. In the
event that shareholders are unable to reach the fund by telephone because of
technical difficulties, market conditions or a natural disaster, redemption and
exchange requests may be made in writing only.
CHECKWRITING -- You may establish check writing privileges for Class A shares
(but not Class 529-A shares) of American Funds money market funds upon meeting
the fund's initial purchase minimum of $1,000. This can be done by using an
account application. If you request check writing privileges, you will be
provided with checks that you may use to draw against your account. These checks
may be made payable to anyone you designate and must be signed by the authorized
number of registered shareholders exactly as indicated on your account
application.
REDEMPTION OF SHARES -- The fund's articles of incorporation permit the fund to
direct the Transfer Agent to redeem the shares of any shareholder for their then
current net asset value per share if at such time the shareholder of record owns
shares having an aggregate net asset value of less than the minimum initial
investment amount required of new shareholders as set forth in the fund's
current registration statement under the 1940 Act, and subject to such further
terms and conditions as the board of directors of the fund may from time to time
adopt.
Fundamental Investors -- Page 54
<PAGE>
While payment of redemptions normally will be in cash, the fund's articles of
incorporation permit payment of the redemption price wholly or partly with
portfolio securities or other fund assets under conditions and circumstances
determined by the fund's board of directors. For example, redemptions could be
made in this manner if the board determined that making payments wholly in cash
over a particular period would be unfair and/or harmful to other fund
shareholders.
SHARE CERTIFICATES -- Shares are credited to your account and certificates are
not issued unless you request them by contacting the Transfer Agent.
Certificates are not available for the 529 or R share classes.
GENERAL INFORMATION
CUSTODIAN OF ASSETS -- Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by State Street Bank and Trust Company, One Lincoln Street, Boston, MA
02111, as Custodian. If the fund holds securities of issuers outside the U.S.,
the Custodian may hold these securities pursuant to subcustodial arrangements in
banks outside the U.S. or branches of U.S. banks outside the U.S.
TRANSFER AGENT -- American Funds Service Company, a wholly owned subsidiary of
the investment adviser, maintains the records of shareholder accounts, processes
purchases and redemptions of the fund's shares, acts as dividend and capital
gain distribution disbursing agent, and performs other related shareholder
service functions. The principal office of American Funds Service Company is
located at 6455 Irvine Center Drive, Irvine, CA 92618. American Funds Service
Company was paid a fee of $40,731,000 for Class A shares and $1,598,000 for
Class B shares for the 2008 fiscal year. American Funds Service Company is also
compensated for certain transfer agency services provided to all other share
classes from the administrative services fees paid to Capital Research and
Management Company and from the relevant share class, as described under
"Administrative services agreement."
In the case of certain shareholder accounts, third parties who may be
unaffiliated with the investment adviser provide transfer agency and shareholder
services in place of American Funds Service Company. These services are rendered
under agreements with American Funds Service Company or its affiliates and the
third parties receive compensation according to such agreements. Compensation
for transfer agency and shareholder services, whether paid to American Funds
Service Company or such third parties, is ultimately paid from fund assets and
is reflected in the expenses of the fund as disclosed in the prospectus.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -- Deloitte & Touche LLP, 695 Town
Center Drive, Costa Mesa, California 92626, serves as the fund's independent
registered public accounting firm, providing audit services, preparation of tax
returns and review of certain documents to be filed with the Securities and
Exchange Commission. The financial statements included in this statement of
additional information from the annual report have been audited by Deloitte &
Touche LLP, an independent registered public accounting firm, as stated in their
report appearing herein. Such financial statements have been so included in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing. The selection of the fund's independent registered
public accounting firm is reviewed and determined annually by the board of
directors.
INDEPENDENT LEGAL COUNSEL -- Paul, Hastings, Janofsky & Walker LLP, 515 South
Flower Street, Los Angeles, CA 90071, serves as independent legal counsel
("counsel") for the fund and for
Fundamental Investors -- Page 55
<PAGE>
independent directors in their capacities as such. Certain legal matters in
connection with certain capital shares offered by the prospectus have been
passed upon for the fund by Paul, Hastings, Janofsky & Walker LLP and DLA Piper
US LLP, Baltimore, Maryland. A determination with respect to the independence of
the fund's counsel will be made at least annually by the independent directors
of the fund, as prescribed by the 1940 Act and related rules.
PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS -- The fund's fiscal
year ends on December 31. Shareholders are provided updated prospectuses
annually and at least semiannually with reports showing the fund's investment
portfolio or summary investment portfolio, financial statements and other
information. The fund's annual financial statements are audited by the fund's
independent registered public accounting firm, Deloitte & Touche LLP. In
addition, shareholders may also receive proxy statements for the fund. In an
effort to reduce the volume of mail shareholders receive from the fund when a
household owns more than one account, the Transfer Agent has taken steps to
eliminate duplicate mailings of prospectuses, shareholder reports and proxy
statements. To receive additional copies of a prospectus, report or proxy
statement, shareholders should contact the Transfer Agent.
Shareholders may also elect to receive updated prospectuses, annual reports and
semi-annual reports electronically by signing up for electronic delivery on our
website, americanfunds.com. Upon electing the electronic delivery of updated
prospectuses and other reports, a shareholder will no longer automatically
receive such documents in paper form by mail. A shareholder who elects
electronic delivery is able to cancel this service at any time and return to
receiving updated prospectuses and other reports in paper form by mail.
Prospectuses, annual reports and semi-annual reports that are mailed to
shareholders by the American Funds organization are printed with ink containing
soy and/or vegetable oil on paper containing recycled fibers.
CODES OF ETHICS -- The fund and Capital Research and Management Company and its
affiliated companies, including the fund's Principal Underwriter, have adopted
codes of ethics that allow for personal investments, including securities in
which the fund may invest from time to time. These codes include a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; preclearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; blackout periods on personal
investing for certain investment personnel; ban on short-term trading profits
for investment personnel; limitations on service as a director of publicly
traded companies; and disclosure of personal securities transactions.
LEGAL PROCEEDINGS -- On February 16, 2005, the NASD (now the Financial Industry
Regulatory Authority, or FINRA) filed an administrative complaint against the
Principal Underwriter. The complaint alleges violations of certain NASD rules by
the Principal Underwriter with respect to the selection of broker-dealer firms
that buy and sell securities for mutual fund investment portfolios. The
complaint seeks sanctions, restitution and disgorgement. On August 30, 2006, a
FINRA Hearing Panel ruled against the Principal Underwriter and imposed a $5
million fine. On April 30, 2008, FINRA's National Adjudicatory Council affirmed
the decision by FINRA's Hearing Panel. The Principal Underwriter has appealed
this decision to the Securities and Exchange Commission.
The investment adviser and Principal Underwriter believe that the likelihood
that this matter could have a material adverse effect on the fund or on the
ability of the investment adviser or Principal
Fundamental Investors -- Page 56
<PAGE>
Underwriter to perform their contracts with the fund is remote. In addition,
class action lawsuits have been filed in the U.S. District Court, Central
District of California, relating to this and other matters. The investment
adviser believes that these suits are without merit and will defend itself
vigorously.
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND MAXIMUM OFFERING PRICE
PER SHARE FOR CLASS A SHARES -- DECEMBER 31, 2008
Net asset value and redemption price per share
(Net assets divided by shares outstanding). . $24.98
Maximum offering price per share
(100/94.25 of net asset value per share,
which takes into account the fund's current maximum
sales charge). . . . . . . . . . . . . . . . $26.50
OTHER INFORMATION -- The fund reserves the right to modify the privileges
described in this statement of additional information at any time.
The financial statements, including the investment portfolio and the report of
the fund's independent registered public accounting firm contained in the annual
report, are included in this statement of additional information. The following
information on fund numbers is not included in the annual report:
Fundamental Investors -- Page 57
<PAGE>
FUND NUMBERS -- Here are the fund numbers for use with our automated telephone
line, American FundsLine/(R)/, or when making share transactions:
FUND NUMBERS
-------------------------------------------------
FUND CLASS A CLASS B CLASS C CLASS F-1 CLASS F-2
-------------------------------------------------------------------------------
STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . 002 202 302 402 602
American Balanced Fund/(R)/ 011 211 311 411 611
American Mutual Fund/(R)/ . 003 203 303 403 603
Capital Income Builder/(R)/ 012 212 312 412 612
Capital World Growth and
Income Fund/SM/ . . . . . . 033 233 333 433 633
EuroPacific Growth Fund/(R)/ 016 216 316 416 616
Fundamental Investors/SM/ . 010 210 310 410 610
The Growth Fund of
America/(R)/. . . . . . . . 005 205 305 405 605
The Income Fund of
America/(R)/. . . . . . . . 006 206 306 406 606
International Growth and
Income Fund/SM/ . . . . . . 034 234 334 434 634
The Investment Company of
America/(R)/. . . . . . . . 004 204 304 404 604
The New Economy Fund/(R)/ . 014 214 314 414 614
New Perspective Fund/(R)/ . 007 207 307 407 607
New World Fund/(R)/ . . . . 036 236 336 436 636
SMALLCAP World Fund/(R)/ . 035 235 335 435 635
Washington Mutual Investors
Fund/SM/ . . . . . . . . . 001 201 301 401 601
BOND FUNDS
American High-Income
Municipal Bond Fund/(R)/ . 040 240 340 440 640
American High-Income
Trust/SM/ . . . . . . . . . 021 221 321 421 621
The Bond Fund of America/SM/ 008 208 308 408 608
Capital World Bond Fund/(R)/ 031 231 331 431 631
Intermediate Bond Fund of
America/SM/ . . . . . . . . 023 223 323 423 623
Limited Term Tax-Exempt Bond
Fund of America/SM/ . . . . 043 243 343 443 643
Short-Term Bond Fund of
America/SM/ . . . . . . . . 048 248 348 448 648
The Tax-Exempt Bond Fund of
America/(R)/. . . . . . . . 019 219 319 419 619
The Tax-Exempt Fund of
California/(R)/*. . . . . . 020 220 320 420 620
The Tax-Exempt Fund of
Maryland/(R)/*. . . . . . . 024 224 324 424 624
The Tax-Exempt Fund of
Virginia/(R)/*. . . . . . . 025 225 325 425 625
U.S. Government Securities
Fund/SM/. . . . . . . . . . 022 222 322 422 622
MONEY MARKET FUNDS
The Cash Management Trust of
America/(R)/. . . . . . . . 009 209 309 409 609
The Tax-Exempt Money Fund of
America/SM/ . . . . . . . . 039 N/A N/A N/A N/A
The U.S. Treasury Money Fund
of America/SM/ . . . . . . 049 N/A N/A N/A N/A
___________
*Qualified for sale only in certain jurisdictions.
Fundamental Investors -- Page 58
<PAGE>
FUND NUMBERS
----------------------------------------------
CLASS CLASS CLASS CLASS CLASS
FUND 529-A 529-B 529-C 529-E 529-F-1
-------------------------------------------------------------------------------
STOCK AND STOCK/BOND FUNDS
AMCAP Fund . . . . . . . . . . 1002 1202 1302 1502 1402
American Balanced Fund . . . . 1011 1211 1311 1511 1411
American Mutual Fund . . . . . 1003 1203 1303 1503 1403
Capital Income Builder . . . . 1012 1212 1312 1512 1412
Capital World Growth and Income
Fund . . . . . . . . . . . . . 1033 1233 1333 1533 1433
EuroPacific Growth Fund . . . 1016 1216 1316 1516 1416
Fundamental Investors . . . . 1010 1210 1310 1510 1410
The Growth Fund of America . . 1005 1205 1305 1505 1405
The Income Fund of America . . 1006 1206 1306 1506 1406
International Growth and Income
Fund . . . . . . . . . . . . . 1034 1234 1334 1534 1434
The Investment Company of
America. . . . . . . . . . . . 1004 1204 1304 1504 1404
The New Economy Fund . . . . . 1014 1214 1314 1514 1414
New Perspective Fund . . . . . 1007 1207 1307 1507 1407
New World Fund . . . . . . . . 1036 1236 1336 1536 1436
SMALLCAP World Fund . . . . . 1035 1235 1335 1535 1435
Washington Mutual Investors
Fund . . . . . . . . . . . . . 1001 1201 1301 1501 1401
BOND FUNDS
American High-Income Trust . . 1021 1221 1321 1521 1421
The Bond Fund of America . . . 1008 1208 1308 1508 1408
Capital World Bond Fund . . . 1031 1231 1331 1531 1431
Intermediate Bond Fund of
America. . . . . . . . . . . . 1023 1223 1323 1523 1423
Short-Term Bond Fund of America 1048 1248 1348 1548 1448
U.S. Government Securities Fund 1022 1222 1322 1522 1422
MONEY MARKET FUND
The Cash Management Trust of
America. . . . . . . . . . . . 1009 1209 1309 1509 1409
Fundamental Investors -- Page 59
<PAGE>
FUND NUMBERS
----------------------------------------
CLASS CLASS CLASS CLASS CLASS
FUND R-1 R-2 R-3 R-4 R-5
-------------------------------------------------------------------------------
STOCK AND STOCK/BOND FUNDS
AMCAP Fund . . . . . . . . . . . . . 2102 2202 2302 2402 2502
American Balanced Fund . . . . . . . 2111 2211 2311 2411 2511
American Mutual Fund . . . . . . . . 2103 2203 2303 2403 2503
Capital Income Builder . . . . . . . 2112 2212 2312 2412 2512
Capital World Growth and Income Fund 2133 2233 2333 2433 2533
EuroPacific Growth Fund . . . . . . 2116 2216 2316 2416 2516
Fundamental Investors . . . . . . . 2110 2210 2310 2410 2510
The Growth Fund of America . . . . . 2105 2205 2305 2405 2505
The Income Fund of America . . . . . 2106 2206 2306 2406 2506
International Growth and Income Fund 2134 2234 2334 2434 2534
The Investment Company of America . 2104 2204 2304 2404 2504
The New Economy Fund . . . . . . . . 2114 2214 2314 2414 2514
New Perspective Fund . . . . . . . . 2107 2207 2307 2407 2507
New World Fund . . . . . . . . . . . 2136 2236 2336 2436 2536
SMALLCAP World Fund . . . . . . . . 2135 2235 2335 2435 2535
Washington Mutual Investors Fund . . 2101 2201 2301 2401 2501
BOND FUNDS
American High-Income Municipal Bond
Fund . . . . . . . . . . . . . . . . N/A N/A N/A N/A 2540
American High-Income Trust . . . . . 2121 2221 2321 2421 2521
The Bond Fund of America . . . . . . 2108 2208 2308 2408 2508
Capital World Bond Fund . . . . . . 2131 2231 2331 2431 2531
Intermediate Bond Fund of America . 2123 2223 2323 2423 2523
Limited Term Tax-Exempt Bond Fund of
America. . . . . . . . . . . . . . . N/A N/A N/A N/A 2543
Short-Term Bond Fund of America. . . 2148 2248 2348 2448 2548
The Tax-Exempt Bond Fund of America N/A N/A N/A N/A 2519
The Tax-Exempt Fund of California* . N/A N/A N/A N/A 2520
The Tax-Exempt Fund of Maryland* . . N/A N/A N/A N/A 2524
The Tax-Exempt Fund of Virginia* . . N/A N/A N/A N/A 2525
U.S. Government Securities Fund . . 2122 2222 2322 2422 2522
MONEY MARKET FUNDS
The Cash Management Trust of America 2109 2209 2309 2409 2509
The Tax-Exempt Money Fund of America N/A N/A N/A N/A 2539
The U.S. Treasury Money Fund of
America . . . . . . . . . . . . . . 2149 2249 2349 2449 2549
___________
*Qualified for sale only in certain
jurisdictions.
Fundamental Investors -- Page 60
<PAGE>
FUND NUMBERS
--------------------------------------------
CLASS CLASS CLASS CLASS CLASS
FUND CLASS A R-1 R-2 R-3 R-4 R-5
-------------------------------------------------------------------------------
AMERICAN FUNDS TARGET DATE RETIREMENT SERIES/(R)/
American Funds 2050 Target Date
Retirement Fund/(R)/ . . . . . . 069 2169 2269 2369 2469 2569
American Funds 2045 Target Date
Retirement Fund/(R)/ . . . . . . 068 2168 2268 2368 2468 2568
American Funds 2040 Target Date
Retirement Fund/(R)/ . . . . . . 067 2167 2267 2367 2467 2567
American Funds 2035 Target Date
Retirement Fund/(R)/ . . . . . . 066 2166 2266 2366 2466 2566
American Funds 2030 Target Date
Retirement Fund/(R)/ . . . . . . 065 2165 2265 2365 2465 2565
American Funds 2025 Target Date
Retirement Fund/(R)/ . . . . . . 064 2164 2264 2364 2464 2564
American Funds 2020 Target Date
Retirement Fund/(R)/ . . . . . . 063 2163 2263 2363 2463 2563
American Funds 2015 Target Date
Retirement Fund/(R)/ . . . . . . 062 2162 2262 2362 2462 2562
American Funds 2010 Target Date
Retirement Fund/(R)/ . . . . . . 061 2161 2261 2361 2461 2561
Fundamental Investors -- Page 61
<PAGE>
APPENDIX
The following descriptions of debt security ratings are based on information
provided by Moody's Investors Service and Standard & Poor's Corporation.
DESCRIPTION OF BOND RATINGS
MOODY'S
LONG-TERM RATING DEFINITIONS
Aaa
Obligations rated Aaa are judged to be of the highest quality, with minimal
credit risk.
Aa
Obligations rated Aa are judged to be of high quality and are subject to very
low credit risk.
A
Obligations rated A are considered upper-medium grade and are subject to low
credit risk.
Baa
Obligations rated Baa are subject to moderate credit risk. They are considered
medium-grade and as such may possess certain speculative characteristics.
Ba
Obligations rated Ba are judged to have speculative elements and are subject to
substantial credit risk.
B
Obligations rated B are considered speculative and are subject to high credit
risk.
Caa
Obligations rated Caa are judged to be of poor standing and are subject to very
high credit risk.
Ca
Obligations rated Ca are highly speculative and are likely in, or very near,
default, with some prospect of recovery of principal and interest.
C
Obligations rated C are the lowest rated class of bonds and are typically in
default, with little prospect for recovery of principal or interest.
NOTE: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating
classification from Aa through Caa. The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.
Fundamental Investors -- Page 62
<PAGE>
STANDARD & POOR'S
LONG-TERM ISSUE CREDIT RATINGS
AAA
An obligation rated AAA has the highest rating assigned by Standard & Poor's.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA
An obligation rated AA differs from the highest-rated obligations only in small
degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A
An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB
An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
BB, B, CCC, CC, AND C
Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.
BB
An obligation rated BB is less vulnerable to nonpayment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.
B
An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.
CCC
An obligation rated CCC is currently vulnerable to nonpayment and is dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation. In the event of adverse
business, financial, or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.
CC
An obligation rated CC is currently highly vulnerable to nonpayment.
Fundamental Investors -- Page 63
<PAGE>
C
A C rating is assigned to obligations that are currently highly vulnerable to
nonpayment, obligations that have payment arrearages allowed by the terms of the
documents, or obligations of an issuer that is the subject of a bankruptcy
petition or similar action which have not experienced a payment default. Among
others, the C rating may be assigned to subordinated debt, preferred stock or
other obligations on which cash payments have been suspended in accordance with
the instrument's terms.
D
An obligation rated D is in payment default. The D rating category is used when
payments on an obligation are not made on the date due even if the applicable
grace period has not expired, unless Standard & Poor's believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-)
The ratings from AA to CCC may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.
Fundamental Investors -- Page 64
[logo – American Funds®]
|
Common stocks
— 88.03%
|
Shares
|
Value
(000)
|
||||||
|
INFORMATION
TECHNOLOGY — 17.61%
|
||||||||
|
Nokia Corp.
(ADR)
|
34,522,000 | $ | 538,543 | |||||
|
Nokia
Corp.1
|
18,900,000 | 293,733 | ||||||
|
Oracle
Corp.2
|
38,391,979 | 680,690 | ||||||
|
Microsoft
Corp.
|
33,295,000 | 647,255 | ||||||
|
Cisco
Systems, Inc.2
|
32,910,000 | 536,433 | ||||||
|
Google Inc.,
Class A2
|
1,200,000 | 369,180 | ||||||
|
Yahoo!
Inc.2
|
28,160,000 | 343,552 | ||||||
|
EMC
Corp.2
|
24,745,000 | 259,080 | ||||||
|
Intuit
Inc.2
|
9,975,000 | 237,305 | ||||||
|
SAP AG
(ADR)
|
6,500,000 | 235,430 | ||||||
|
Corning
Inc.
|
16,520,000 | 157,436 | ||||||
|
Applied
Materials, Inc.
|
14,600,000 | 147,898 | ||||||
|
Fidelity
National Information Services, Inc.
|
7,615,000 | 123,896 | ||||||
|
Kyocera
Corp.1
|
1,625,000 | 116,969 | ||||||
|
Lender
Processing Services, Inc.
|
3,807,500 | 112,131 | ||||||
|
Xilinx,
Inc.
|
5,800,000 | 103,356 | ||||||
|
Paychex,
Inc.
|
3,900,000 | 102,492 | ||||||
|
International
Business Machines Corp.
|
1,200,000 | 100,992 | ||||||
|
Microchip
Technology Inc.
|
4,818,000 | 94,096 | ||||||
|
Apple
Inc.2
|
1,000,000 | 85,350 | ||||||
|
Trimble
Navigation Ltd.2
|
3,725,000 | 80,497 | ||||||
|
STMicroelectronics
NV1
|
11,000,000 | 73,852 | ||||||
|
QUALCOMM
Inc.
|
2,000,000 | 71,660 | ||||||
|
Red Hat,
Inc.2
|
5,301,536 | 70,086 | ||||||
|
Linear
Technology Corp.
|
2,700,000 | 59,724 | ||||||
|
Hewlett-Packard
Co.
|
1,500,000 | 54,435 | ||||||
|
Texas
Instruments Inc.
|
3,500,000 | 54,320 | ||||||
|
Autodesk,
Inc.2
|
2,500,000 | 49,125 | ||||||
|
Comverse
Technology, Inc.2
|
7,684,470 | 48,105 | ||||||
|
ASML Holding
NV1
|
2,609,568 | 46,685 | ||||||
|
KLA-Tencor
Corp.
|
1,674,500 | 36,487 | ||||||
|
Dell
Inc.2
|
2,000,000 | 20,480 | ||||||
|
Tyco
Electronics Ltd.
|
1,125,000 | 18,236 | ||||||
|
HTC
Corp.1
|
1,522,800 | 15,390 | ||||||
|
Murata
Manufacturing Co., Ltd.1
|
300,000 | 11,734 | ||||||
|
Metavante
Technologies, Inc.2
|
496,666 | 8,001 | ||||||
| 6,004,634 | ||||||||
|
INDUSTRIALS
— 12.24%
|
||||||||
|
Deere &
Co.
|
10,500,000 | 402,360 | ||||||
|
Schneider
Electric SA1
|
4,110,075 | 307,770 | ||||||
|
Emerson
Electric Co.
|
8,400,000 | 307,524 | ||||||
|
Union Pacific
Corp.
|
6,100,000 | 291,580 | ||||||
|
General
Electric Co.
|
14,700,000 | 238,140 | ||||||
|
Caterpillar
Inc.
|
5,217,500 | 233,066 | ||||||
|
General
Dynamics Corp.
|
3,545,800 | 204,203 | ||||||
|
Northrop
Grumman Corp.
|
4,366,243 | 196,655 | ||||||
|
Parker
Hannifin Corp.
|
4,200,000 | 178,668 | ||||||
|
Boeing
Co.
|
4,000,000 | 170,680 | ||||||
|
Waste
Management, Inc.
|
5,100,000 | 169,014 | ||||||
|
Deutsche Post
AG1
|
8,945,000 | 151,707 | ||||||
|
Raytheon
Co.
|
2,832,732 | 144,583 | ||||||
|
Tyco
International Ltd.
|
6,615,000 | 142,884 | ||||||
|
European
Aeronautic Defence and Space Co. EADS NV1
|
7,500,000 | 126,937 | ||||||
|
Lockheed
Martin Corp.
|
1,248,200 | 104,949 | ||||||
|
Fastenal
Co.
|
2,995,500 | 104,393 | ||||||
|
Finmeccanica
SpA1
|
6,000,000 | 92,140 | ||||||
|
United Parcel
Service, Inc., Class B
|
1,600,000 | 88,256 | ||||||
|
Precision
Castparts Corp.
|
1,300,000 | 77,324 | ||||||
|
United
Technologies Corp.
|
1,250,000 | 67,000 | ||||||
|
Mitsubishi
Heavy Industries, Ltd.1
|
14,446,000 | 64,312 | ||||||
|
KBR,
Inc.
|
3,950,000 | 60,040 | ||||||
|
Mitsubishi
Corp.1
|
3,995,800 | 55,971 | ||||||
|
Joy Global
Inc.
|
2,238,638 | 51,242 | ||||||
|
Corporate
Executive Board Co.3
|
2,304,200 | 50,831 | ||||||
|
Grafton Group
PLC, units1,3
|
14,650,000 | 47,441 | ||||||
|
Republic
Services, Inc.
|
1,125,000 | 27,889 | ||||||
|
Kingspan
Group PLC1
|
3,500,000 | 15,297 | ||||||
| 4,172,856 | ||||||||
|
HEALTH
CARE — 11.87%
|
||||||||
|
Merck &
Co., Inc.
|
19,940,800 | 606,200 | ||||||
|
Roche Holding
AG1
|
3,025,000 | 462,758 | ||||||
|
Eli Lilly and
Co.
|
9,898,400 | 398,609 | ||||||
|
Wyeth
|
10,000,000 | 375,100 | ||||||
|
Bayer AG,
non-registered shares1
|
4,670,000 | 275,019 | ||||||
|
Abbott
Laboratories
|
4,450,000 | 237,496 | ||||||
|
C. R. Bard,
Inc.
|
2,500,000 | 210,650 | ||||||
|
UnitedHealth
Group Inc.
|
6,500,000 | 172,900 | ||||||
|
Hologic,
Inc.2
|
12,730,000 | 166,381 | ||||||
|
Shire Ltd.
(ADR)
|
3,500,000 | 156,730 | ||||||
|
Medtronic,
Inc.
|
4,124,700 | 129,598 | ||||||
|
Johnson &
Johnson
|
2,000,000 | 119,660 | ||||||
|
Amgen
Inc.2
|
2,058,000 | 118,849 | ||||||
|
Schering-Plough
Corp.
|
5,302,800 | 90,307 | ||||||
|
Celgene
Corp.2
|
1,600,000 | 88,448 | ||||||
|
Boston
Scientific Corp.2
|
11,290,000 | 87,385 | ||||||
|
Stryker
Corp.
|
1,700,000 | 67,915 | ||||||
|
Novo Nordisk
A/S, Class B1
|
1,329,000 | 67,826 | ||||||
|
Aetna
Inc.
|
2,310,000 | 65,835 | ||||||
|
St. Jude
Medical, Inc.2
|
1,600,000 | 52,736 | ||||||
|
Hospira,
Inc.2
|
1,700,000 | 45,594 | ||||||
|
Medco Health
Solutions, Inc.2
|
926,000 | 38,809 | ||||||
|
Elan Corp.,
PLC (ADR)2
|
1,832,661 | 10,996 | ||||||
| 4,045,801 | ||||||||
|
ENERGY
— 10.54%
|
||||||||
|
Suncor Energy
Inc.
|
36,866,206 | 717,658 | ||||||
|
Occidental
Petroleum Corp.
|
6,804,244 | 408,186 | ||||||
|
Chevron
Corp.
|
2,892,763 | 213,978 | ||||||
|
Tenaris SA
(ADR)
|
10,170,000 | 213,367 | ||||||
|
EnCana
Corp.
|
4,300,000 | 201,008 | ||||||
|
Diamond
Offshore Drilling, Inc.
|
3,332,000 | 196,388 | ||||||
|
Murphy Oil
Corp.
|
4,343,636 | 192,640 | ||||||
|
CONSOL Energy
Inc.4
|
6,700,000 | 191,486 | ||||||
|
Royal Dutch
Shell PLC, Class A (ADR)
|
3,500,000 | 185,290 | ||||||
|
Hess
Corp.
|
3,000,000 | 160,920 | ||||||
|
Imperial Oil
Ltd.
|
3,608,739 | 121,397 | ||||||
|
Petróleo
Brasileiro SA – Petrobras, ordinary nominative (ADR)
|
4,850,000 | 118,776 | ||||||
|
Schlumberger
Ltd.
|
2,700,000 | 114,291 | ||||||
|
Petro-Canada
|
4,890,000 | 107,231 | ||||||
|
Transocean
Ltd.2
|
1,500,000 | 70,875 | ||||||
|
Devon Energy
Corp.
|
1,000,000 | 65,710 | ||||||
|
OAO LUKOIL
(ADR)1
|
2,000,000 | 64,846 | ||||||
|
Smith
International, Inc.
|
2,685,000 | 61,460 | ||||||
|
Acergy
SA1
|
9,520,000 | 54,555 | ||||||
|
Exxon Mobil
Corp.
|
500,000 | 39,915 | ||||||
|
OAO TMK
(GDR)1
|
5,685,000 | 22,164 | ||||||
|
Marathon Oil
Corp.
|
710,000 | 19,426 | ||||||
|
Saipem SpA,
Class S1
|
1,000,000 | 16,833 | ||||||
|
Cameco
Corp.
|
846,300 | 14,620 | ||||||
|
Quicksilver
Resources Inc.2
|
2,592,200 | 14,439 | ||||||
|
CNX Gas
Corp.2
|
217,800 | 5,946 | ||||||
| 3,593,405 | ||||||||
|
FINANCIALS
— 7.58%
|
||||||||
|
Wells Fargo
& Co.
|
10,880,000 | 320,742 | ||||||
|
Berkshire
Hathaway Inc., Class A2
|
2,945 | 284,487 | ||||||
|
JPMorgan
Chase & Co.
|
8,000,000 | 252,240 | ||||||
|
Bank of
America Corp.
|
17,160,000 | 241,613 | ||||||
|
U.S.
Bancorp
|
8,712,000 | 217,887 | ||||||
|
Citigroup
Inc.
|
28,900,000 | 193,919 | ||||||
|
SunTrust
Banks, Inc.
|
6,000,000 | 177,240 | ||||||
|
ACE
Ltd.
|
3,200,000 | 169,344 | ||||||
|
AMP Ltd.1
|
25,000,412 | 96,949 | ||||||
|
Capital One
Financial Corp.
|
2,400,000 | 76,536 | ||||||
|
Marsh &
McLennan Companies, Inc.
|
2,795,000 | 67,835 | ||||||
|
AXA SA1
|
2,845,500 | 63,597 | ||||||
|
M&T Bank
Corp.
|
1,090,000 | 62,577 | ||||||
|
Industrial
and Commercial Bank of China Ltd., Class H1
|
109,000,000 | 57,935 | ||||||
|
Marshall
& Ilsley Corp.
|
3,189,998 | 43,512 | ||||||
|
T. Rowe Price
Group, Inc.
|
1,200,000 | 42,528 | ||||||
|
HSBC Holdings
PLC (United Kingdom)1
|
4,000,000 | 38,723 | ||||||
|
People’s
United Financial, Inc.
|
2,000,000 | 35,660 | ||||||
|
Bank of New
York Mellon Corp.
|
1,000,000 | 28,330 | ||||||
|
CapitalSource
Inc.
|
5,500,954 | 25,414 | ||||||
|
American
Express Co.
|
1,100,000 | 20,405 | ||||||
|
Irish Life
& Permanent PLC1
|
9,000,000 | 20,020 | ||||||
|
Allied Irish
Banks, PLC1
|
8,200,000 | 19,991 | ||||||
|
Bank of
Ireland1
|
15,863,513 | 18,738 | ||||||
|
Zions
Bancorporation
|
252,000 | 6,177 | ||||||
| 2,582,399 | ||||||||
|
CONSUMER
DISCRETIONARY — 7.18%
|
||||||||
|
McDonald’s
Corp.
|
9,406,400 | 584,984 | ||||||
|
Lowe’s
Companies, Inc.
|
20,210,000 | 434,919 | ||||||
|
Time Warner
Inc.
|
17,500,000 | 176,050 | ||||||
|
Home Depot,
Inc.
|
7,500,000 | 172,650 | ||||||
|
Johnson
Controls, Inc.
|
7,500,000 | 136,200 | ||||||
|
Best Buy Co.,
Inc.
|
3,775,000 | 106,115 | ||||||
|
Toyota Motor
Corp.1
|
3,000,000 | 97,982 | ||||||
|
Target
Corp.
|
2,750,000 | 94,958 | ||||||
|
Amazon.com,
Inc.2
|
1,600,000 | 82,048 | ||||||
|
Starbucks
Corp.2
|
8,000,000 | 75,680 | ||||||
|
Macy’s,
Inc.
|
6,500,000 | 67,275 | ||||||
|
Starwood
Hotels & Resorts Worldwide, Inc.
|
3,424,417 | 61,297 | ||||||
|
Nikon
Corp.1
|
3,977,000 | 47,543 | ||||||
|
Virgin Media
Inc.2
|
8,000,000 | 39,920 | ||||||
|
Honda Motor
Co., Ltd.1
|
1,841,500 | 39,849 | ||||||
|
Harman
International Industries, Inc.
|
2,370,000 | 39,650 | ||||||
|
Penn National
Gaming, Inc.2
|
1,763,000 | 37,693 | ||||||
|
News Corp.,
Class A
|
3,650,000 | 33,179 | ||||||
|
Weight
Watchers International, Inc.
|
1,070,000 | 31,479 | ||||||
|
Garmin
Ltd.
|
1,469,383 | 28,168 | ||||||
|
Chipotle
Mexican Grill, Inc., Class A2
|
238,832 | 14,803 | ||||||
|
Chipotle
Mexican Grill, Inc., Class B2
|
208,000 | 11,916 | ||||||
|
Liberty Media
Corp., Liberty Interactive, Series A2
|
6,274,100 | 19,575 | ||||||
|
Magna
International Inc., Class A
|
474,300 | 14,196 | ||||||
| 2,448,129 | ||||||||
|
MATERIALS
— 6.28%
|
||||||||
|
Syngenta
AG1
|
2,025,400 | 389,946 | ||||||
|
Potash Corp.
of Saskatchewan Inc.
|
2,509,100 | 183,716 | ||||||
|
Monsanto
Co.
|
2,550,000 | 179,392 | ||||||
|
Rio Tinto
PLC1
|
7,266,709 | 159,248 | ||||||
|
CRH PLC1
|
6,083,204 | 153,907 | ||||||
|
E.I. du Pont
de Nemours and Co.
|
5,500,000 | 139,150 | ||||||
|
Sigma-Aldrich
Corp.
|
2,650,000 | 111,936 | ||||||
|
Freeport-McMoRan
Copper & Gold Inc.
|
4,500,000 | 109,980 | ||||||
|
Weyerhaeuser
Co.
|
3,583,000 | 109,676 | ||||||
|
Newmont
Mining Corp.
|
2,500,000 | 101,750 | ||||||
|
BHP Billiton
Ltd.1
|
4,675,000 | 100,439 | ||||||
|
Alcoa
Inc.
|
8,150,000 | 91,769 | ||||||
|
Ecolab
Inc.
|
1,600,000 | 56,240 | ||||||
|
Southern Peru
Copper Corp.
|
2,800,000 | 44,968 | ||||||
|
United States
Steel Corp.
|
1,000,000 | 37,200 | ||||||
|
Mosaic
Co.
|
1,000,000 | 34,600 | ||||||
|
Vulcan
Materials Co.
|
450,000 | 31,311 | ||||||
|
Norsk Hydro
ASA1
|
6,500,000 | 26,422 | ||||||
|
Cliffs
Natural Resources Inc.
|
1,000,000 | 25,610 | ||||||
|
Buzzi Unicem
SpA, nonconvertible shares1
|
2,640,000 | 24,587 | ||||||
|
Grupo México,
SAB de CV, Series B
|
36,757,713 | 23,458 | ||||||
|
Temple-Inland
Inc.
|
1,500,000 | 7,200 | ||||||
| 2,142,505 | ||||||||
|
CONSUMER
STAPLES — 5.19%
|
||||||||
|
Wal-Mart
Stores, Inc.
|
7,732,700 | 433,495 | ||||||
|
Philip Morris
International Inc.
|
8,224,800 | 357,861 | ||||||
|
Altria Group,
Inc.
|
14,996,000 | 225,840 | ||||||
|
Coca-Cola
Co.
|
3,850,000 | 174,290 | ||||||
|
Avon
Products, Inc.
|
6,880,000 | 165,326 | ||||||
|
Procter &
Gamble Co.
|
1,600,000 | 98,912 | ||||||
|
Diageo
PLC1
|
6,700,000 | 94,267 | ||||||
|
Kraft Foods
Inc., Class A
|
3,400,000 | 91,290 | ||||||
|
Unilever NV,
depository receipts1
|
2,995,000 | 72,749 | ||||||
|
Archer
Daniels Midland Co.
|
1,310,000 | 37,767 | ||||||
|
C&C Group
PLC1
|
8,884,742 | 18,035 | ||||||
| 1,769,832 | ||||||||
|
TELECOMMUNICATION
SERVICES — 3.32%
|
||||||||
|
AT&T
Inc.
|
18,512,500 | 527,606 | ||||||
|
Verizon
Communications Inc.
|
9,400,000 | 318,660 | ||||||
|
KDDI
Corp.1
|
20,000 | 142,134 | ||||||
|
Vodafone
Group PLC1
|
44,500,000 | 90,609 | ||||||
|
Qwest
Communications International Inc.
|
10,500,000 | 38,220 | ||||||
|
Sprint Nextel
Corp., Series 12
|
8,400,000 | 15,372 | ||||||
| 1,132,601 | ||||||||
|
UTILITIES
— 2.82%
|
||||||||
|
Questar
Corp.
|
5,000,000 | 163,450 | ||||||
|
American
Water Works Co., Inc.
|
7,785,000 | 162,551 | ||||||
|
Exelon
Corp.
|
2,545,000 | 141,527 | ||||||
|
GDF Suez1
|
2,809,089 | 139,471 | ||||||
|
Edison
International
|
3,250,000 | 104,390 | ||||||
|
Electricité
de France SA1
|
1,734,000 | 101,032 | ||||||
|
FPL Group,
Inc.
|
1,256,397 | 63,234 | ||||||
|
Duke Energy
Corp.
|
3,000,000 | 45,030 | ||||||
|
E.ON AG1
|
500,000 | 20,269 | ||||||
|
Entergy
Corp.
|
150,000 | 12,470 | ||||||
|
SUEZ
Environnement Co.1,2
|
500,000 | 8,452 | ||||||
| 961,876 | ||||||||
|
MISCELLANEOUS
— 3.40%
|
||||||||
|
Other common
stocks in initial period of acquisition
|
1,154,476 | |||||||
|
Total
common stocks (cost: $37,451,706,000)
|
30,008,514 | |||||||
|
Principal
amount
|
||||||||
|
Bonds &
notes — 0.15%
|
(000 | ) | ||||||
|
INDUSTRIALS
— 0.15%
|
||||||||
|
Burlington
Northern Santa Fe Corp. 7.00% 2014
|
$ | 48,570 | 50,741 | |||||
|
Total
bonds & notes (cost: $48,559,000)
|
50,741 | |||||||
|
Short-term
securities — 11.40%
|
||||||||
|
Freddie Mac
0.25%–2.35% due 1/12–9/30/2009
|
1,086,444 | 1,085,086 | ||||||
|
Fannie Mae
0.10%–2.50% due 1/28–6/19/2009
|
778,500 | 777,788 | ||||||
|
Federal Home
Loan Bank 0.22%–2.65% due 1/16–4/13/2009
|
594,900 | 594,597 | ||||||
|
U.S. Treasury
Bills 1.89%–1.945% due 1/15–2/12/2009
|
188,800 | 188,795 | ||||||
|
Hewlett-Packard
Co. 0.30%–2.20% due 1/7–2/12/20095
|
160,495 | 160,370 | ||||||
|
Walt Disney
Co. 0.40%–1.70% due 1/13–4/6/2009
|
141,800 | 141,641 | ||||||
|
Procter &
Gamble International Funding S.C.A. 0.35%–1.40% due 3/4–3/27/20095
|
84,500 | 84,457 | ||||||
|
Procter &
Gamble Co. 1.75% due 2/10/20095
|
31,800 | 31,772 | ||||||
|
Illinois Tool
Works Inc. 1.50%–1.85% due 1/8–1/12/2009
|
100,000 | 99,963 | ||||||
|
Honeywell
International Inc. 0.28%–2.10% due 1/20–3/23/20095
|
65,000 | 64,946 | ||||||
|
AT&T Inc.
0.35%–2.10% due 1/9–1/20/20095
|
60,000 | 59,980 | ||||||
|
International
Bank for Reconstruction and Development 1.00% due
2/18/2009
|
58,200 | 58,184 | ||||||
|
Bank of
America Corp. 1.90% due 2/4/2009
|
50,000 | 50,002 | ||||||
|
Chevron Corp.
0.15% due 2/27/2009
|
50,000 | 49,984 | ||||||
|
United Parcel
Service Inc. 0.50% due 3/3/20095
|
50,000 | 49,978 | ||||||
|
Federal Farm
Credit Banks 1.00% due 3/25/2009
|
50,000 | 49,966 | ||||||
|
General
Dynamics Corp. 2.30% due 1/16/20095
|
50,000 | 49,952 | ||||||
|
General
Electric Capital Corp., FDIC insured, 0.75% due 2/9/2009
|
50,000 | 49,901 | ||||||
|
Park Avenue
Receivables Co., LLC 1.40% due 1/14/20095
|
21,428 | 21,416 | ||||||
|
Jupiter
Securitization Co., LLC 0.25% due 1/28/20095
|
19,700 | 19,696 | ||||||
|
Private
Export Funding Corp. 0.15%–1.30% due 1/21–3/2/20095
|
40,100 | 40,063 | ||||||
|
Emerson
Electric Co. 1.20% due 1/26/20095
|
36,000 | 35,969 | ||||||
|
Caterpillar
Inc. 1.30% due 1/7/20095
|
17,300 | 17,295 | ||||||
|
Caterpillar
Financial Services Corp. 1.30% due 1/5/2009
|
17,000 | 16,997 | ||||||
|
Merck &
Co. Inc. 1.75% due 1/6/2009
|
29,300 | 29,293 | ||||||
|
Harvard
University 1.07% due 2/5/2009
|
20,000 | 19,981 | ||||||
|
NetJets Inc.
1.05% due 1/20/20095
|
19,900 | 19,874 | ||||||
|
Estée Lauder
Companies Inc. 1.25% due 1/12/20095
|
15,000 | 14,994 | ||||||
|
Medtronic
Inc. 1.30% due 2/2/20095
|
3,900 | 3,892 | ||||||
|
Total
short-term securities (cost: $3,882,013,000)
|
3,886,832 | |||||||
|
Total
investment securities (cost: $41,382,278,000)
|
33,946,087 | |||||||
|
Other
assets less liabilities
|
143,735 | |||||||
|
Net
assets
|
$ | 34,089,822 | ||||||
|
Industry
sector diversification (percent
of net assets)
|
|
|||
|
Information
technology
|
17.61 | % | ||
|
Industrials
|
12.24 | |||
|
Health
Care
|
11.87 | |||
|
Energy
|
10.54 | |||
|
Financials
|
7.58 | |||
|
Other
industries
|
28.19 | |||
|
Bonds &
Notes
|
0.15 | |||
|
Short-term
securities & other assets less liabilities
|
11.82 | |||
|
Country
diversification (percent
of net assets)
|
|
|||
|
United
States
|
65.0 | % | ||
|
Euro zone
*
|
9.1 | |||
|
Canada
|
3.9 | |||
|
Japan
|
1.7 | |||
|
Switzerland
|
3.4 | |||
|
United
Kingdom
|
2.5 | |||
|
Other
countries
|
2.4 | |||
|
Bonds,
short-term securities & other assets less liabilities
|
12.0 | |||
|
*Countries
using the euro as a common currency; those represented in the
fund's
|
||||
|
portfolio are
Finland, France, Germany, Ireland, Italy and the
Netherlands.
|
||||
|
Shares
|
Value
(000)
|
Percent
of
net
assets
|
||||||||||
|
|
||||||||||||
|
Common
stocks - 88.03%
|
||||||||||||
|
Information
technology - 17.61%
|
||||||||||||
|
Nokia Corp.
(ADR)
|
34,522,000 | $ | 538,543 | |||||||||
|
Nokia Corp.
(1)
|
18,900,000 | 293,733 | 2.44 | % | ||||||||
|
Oracle Corp.
(2)
|
38,391,979 | 680,690 | 2.00 | |||||||||
|
Microsoft
Corp.
|
33,295,000 | 647,255 | 1.90 | |||||||||
|
Cisco
Systems, Inc. (2)
|
32,910,000 | 536,433 | 1.57 | |||||||||
|
Google Inc.,
Class A (2)
|
1,200,000 | 369,180 | 1.08 | |||||||||
|
Yahoo! Inc.
(2)
|
28,160,000 | 343,552 | 1.01 | |||||||||
|
EMC Corp.
(2)
|
24,745,000 | 259,080 | .76 | |||||||||
|
Intuit Inc.
(2)
|
9,975,000 | 237,305 | .70 | |||||||||
|
SAP AG
(ADR)
|
6,500,000 | 235,430 | .69 | |||||||||
|
Other
securities
|
1,863,433 | 5.46 | ||||||||||
| 6,004,634 | 17.61 | |||||||||||
|
Industrials -
12.24%
|
||||||||||||
|
Deere &
Co.
|
10,500,000 | 402,360 | 1.18 | |||||||||
|
Schneider
Electric SA (1)
|
4,110,075 | 307,770 | .90 | |||||||||
|
Emerson
Electric Co.
|
8,400,000 | 307,524 | .90 | |||||||||
|
Union Pacific
Corp.
|
6,100,000 | 291,580 | .86 | |||||||||
|
General
Electric Co.
|
14,700,000 | 238,140 | .70 | |||||||||
|
Caterpillar
Inc.
|
5,217,500 | 233,066 | .68 | |||||||||
|
General
Dynamics Corp.
|
3,545,800 | 204,203 | .60 | |||||||||
|
Northrop
Grumman Corp.
|
4,366,243 | 196,655 | .58 | |||||||||
|
Other
securities
|
1,991,558 | 5.84 | ||||||||||
| 4,172,856 | 12.24 | |||||||||||
|
Health
care - 11.87%
|
||||||||||||
|
Merck &
Co., Inc.
|
19,940,800 | 606,200 | 1.78 | |||||||||
|
Roche Holding
AG (1)
|
3,025,000 | 462,758 | 1.36 | |||||||||
|
Eli Lilly and
Co.
|
9,898,400 | 398,609 | 1.17 | |||||||||
|
Wyeth
|
10,000,000 | 375,100 | 1.10 | |||||||||
|
Bayer AG,
non-registered shares (1)
|
4,670,000 | 275,019 | .81 | |||||||||
|
Abbott
Laboratories
|
4,450,000 | 237,496 | .69 | |||||||||
|
C. R. Bard,
Inc.
|
2,500,000 | 210,650 | .62 | |||||||||
|
Other
securities
|
1,479,969 | 4.34 | ||||||||||
| 4,045,801 | 11.87 | |||||||||||
|
Energy -
10.54%
|
||||||||||||
|
Suncor Energy
Inc.
|
36,866,206 | 717,658 | 2.10 | |||||||||
|
Occidental
Petroleum Corp.
|
6,804,244 | 408,186 | 1.20 | |||||||||
|
Chevron
Corp.
|
2,892,763 | 213,978 | .63 | |||||||||
|
Tenaris SA
(ADR)
|
10,170,000 | 213,367 | .63 | |||||||||
|
EnCana
Corp.
|
4,300,000 | 201,008 | .59 | |||||||||
|
Diamond
Offshore Drilling, Inc.
|
3,332,000 | 196,388 | .58 | |||||||||
|
Murphy Oil
Corp.
|
4,343,636 | 192,640 | .56 | |||||||||
|
CONSOL Energy
Inc. (3)
|
6,700,000 | 191,486 | .56 | |||||||||
|
Other
securities
|
1,258,694 | 3.69 | ||||||||||
| 3,593,405 | 10.54 | |||||||||||
|
Financials -
7.58%
|
||||||||||||
|
Wells Fargo
& Co.
|
10,880,000 | 320,742 | .94 | |||||||||
|
Berkshire
Hathaway Inc., Class A (2)
|
2,945 | 284,487 | .84 | |||||||||
|
JPMorgan
Chase & Co.
|
8,000,000 | 252,240 | .74 | |||||||||
|
Bank of
America Corp.
|
17,160,000 | 241,613 | .71 | |||||||||
|
U.S.
Bancorp
|
8,712,000 | 217,887 | .64 | |||||||||
|
Citigroup
Inc.
|
28,900,000 | 193,919 | .57 | |||||||||
|
Other
securities
|
1,071,511 | 3.14 | ||||||||||
| 2,582,399 | 7.58 | |||||||||||
|
Consumer
discretionary - 7.18%
|
||||||||||||
|
McDonald's
Corp.
|
9,406,400 | 584,984 | 1.72 | |||||||||
|
Lowe's
Companies, Inc.
|
20,210,000 | 434,919 | 1.27 | |||||||||
|
Other
securities
|
1,428,226 | 4.19 | ||||||||||
| 2,448,129 | 7.18 | |||||||||||
|
Materials -
6.28%
|
||||||||||||
|
Syngenta AG
(1)
|
2,025,400 | 389,946 | 1.14 | |||||||||
|
Other
securities
|
1,752,559 | 5.14 | ||||||||||
| 2,142,505 | 6.28 | |||||||||||
|
Consumer
staples - 5.19%
|
||||||||||||
|
Wal-Mart
Stores, Inc.
|
7,732,700 | 433,495 | 1.27 | |||||||||
|
Philip Morris
International Inc.
|
8,224,800 | 357,861 | 1.05 | |||||||||
|
Altria Group,
Inc.
|
14,996,000 | 225,840 | .66 | |||||||||
|
Other
securities
|
752,636 | 2.21 | ||||||||||
| 1,769,832 | 5.19 | |||||||||||
|
Telecommunication
services - 3.32%
|
||||||||||||
|
AT&T
Inc.
|
18,512,500 | 527,606 | 1.55 | |||||||||
|
Verizon
Communications Inc.
|
9,400,000 | 318,660 | .93 | |||||||||
|
Other
securities
|
286,335 | .84 | ||||||||||
| 1,132,601 | 3.32 | |||||||||||
|
Utilities-
2.82%
|
||||||||||||
|
Other
securities
|
961,876 | 2.82 | ||||||||||
|
Miscellaneous - 3.40%
|
||||||||||||
|
Other common
stocks in initial period of acquisition
|
1,154,476 | 3.40 | ||||||||||
|
Total
common stocks (cost: $37,451,706,000)
|
30,008,514 | 88.03 | ||||||||||
|
Value
(000)
|
Percent
of net assets
|
|||||||||||
|
Bonds
& notes - 0.15%
|
||||||||||||
|
Industrials
- 0.15%
|
||||||||||||
|
Other
securities
|
50,741 | .15 | ||||||||||
|
Total
bonds & notes (cost: $48,559,000)
|
50,741 | .15 | ||||||||||
|
Principal
amount (000)
|
Value
(000)
|
Percent
of net assets
|
||||||||||
|
Short-term
securities - 11.40%
|
||||||||||||
|
Freddie Mac
0.25%-2.35% due 1/12-9/30/2009
|
$ | 1,086,444 | 1,085,086 | 3.18 | ||||||||
|
Fannie Mae
0.10%-2.50% due 1/28-6/19/2009
|
778,500 | 777,788 | 2.28 | |||||||||
|
Federal Home
Loan Bank 0.22%-2.65% due 1/16-4/13/2009
|
594,900 | 594,597 | 1.74 | |||||||||
|
U.S. Treasury
Bills 1.89%-1.945% due 1/15-2/12/2009
|
188,800 | 188,795 | .55 | |||||||||
|
AT&T Inc.
0.35%-2.10% due 1/9-1/20/2009 (4)
|
60,000 | 59,980 | .18 | |||||||||
|
Emerson
Electric Co. 1.20% due 1/26/2009 (4)
|
36,000 | 35,969 | .11 | |||||||||
|
Merck &
Co. Inc. 1.75% due 1/6/2009
|
29,300 | 29,293 | .09 | |||||||||
|
Other
securities
|
1,115,324 | 3.27 | ||||||||||
|
Total
short-term securities (cost: $3,882,013,000)
|
3,886,832 | 11.40 | ||||||||||
|
Total
investment securities (cost: $41,382,278,000)
|
33,946,087 | 99.58 | ||||||||||
|
Other
assets less liabilities
|
143,735 | .42 | ||||||||||
|
Net
assets
|
$ | 34,089,822 | 100.00 | % | ||||||||
|
"Miscellaneous"
securities include holdings in their initial period of acquisition that
have not previously been publicly disclosed.
|
||||||||||||
|
"Other
securities" includes all issues that are not disclosed separately in the
summary investment portfolio.
|
||||||||||||
|
Investments
in affiliates
|
|
A company is
considered to be an affiliate of the fund under the Investment Company Act
of 1940 if the
|
|
fund's
holdings in that company represent 5% or more of the outstanding voting
shares of that company.
|
|
The value of
the fund's holdings in affiliated companies is included in "Other
securities"
|
|
under their
respective industry sectors in the preceding summary investment portfolio.
Further details on
|
|
these
holdings and related transactions during the year ended December 31, 2008,
appear below.
|
|
Beginning
shares
|
Additions
|
Reductions
|
Ending
shares
|
Dividend
income
(000)
|
Value of
affiliates at 12/31/08 (000)
|
|||||||||||||||||||
|
Corporate
Executive Board Co.
|
2,304,200 | - | - | 2,304,200 | $ | 4,055 | $ | 50,831 | ||||||||||||||||
|
Grafton Group
PLC, units (1)
|
9,500,000 | 5,150,000 | - | 14,650,000 | 3,122 | 47,441 | ||||||||||||||||||
|
C&C Group
PLC (5)
|
16,055,047 | - | 7,170,305 | 8,884,742 | 5,019 | - | ||||||||||||||||||
|
Rohm and Haas
Co.(5)
|
8,607,300 | 1,795,400 | 10,402,700 | - | 12,768 | - | ||||||||||||||||||
| $ | 24,964 | $ | 98,272 | |||||||||||||||||||||
|
The following
footnotes apply to either the individual securities noted or one or more
of the securities aggregated and listed as a single line
item.
|
||||||||||||
|
(1) Valued
under fair value procedures adopted by authority of the board of
directors. The total value of all such securities,
|
||||||||||||
|
including
those in "Miscellaneous" and "Other securities," was $4,750,396,000,
which represented 13.93% of the net assets of the fund.
|
||||||||||||
|
(2) Security
did not produce income during the last 12 months.
|
||||||||||||
|
(3) Purchased
in a transaction exempt from registration under the securities Act of
1933. This security (acquired 10/2/2003 at a cost of $61,372,000) may be
subject to legal or contractual restrictions on resale.
|
||||||||||||
|
(4) Purchased
in a transaction exempt from registration under the Securities Act of
1933. May be resold in the U.S. in transactions exempt
|
||||||||||||
|
from
registration, normally to qualified institutional buyers. The total value
of all such securities, including those in "Other
securities,"
|
||||||||||||
|
was
$674,654,000, which represented 1.98% of the net assets of the
fund.
|
||||||||||||
|
(5)
Unaffiliated issuer at 12/31/2008.
|
||||||||||||
|
Key
to abbreviation
|
||||||||||||
|
ADR =
American Depositary Receipts
|
||||||||||||
|
The industry
classifications shown in the summary investment portfolio were obtained
from sources
|
||||||||||||
|
believed to
be reliable and are not covered by the Report of Independent Registered
Public Accounting Firm.
|
||||||||||||
|
See Notes to
Financial Statements
|
||||||||||||
|
Statement
of assets and liabilities
|
||||||||
|
at December
31, 2008
|
(dollars in
thousands)
|
|||||||
|
Assets:
|
||||||||
|
Investment
securities, at value:
|
||||||||
|
Unaffiliated
issuers (cost: $41,061,272)
|
$ | 33,847,815 | ||||||
|
Affiliated
issuers (cost: $321,006)
|
98,272 | $ | 33,946,087 | |||||
|
Cash
denominated in currencies other than U.S. dollars
|
||||||||
|
(cost:
$1,467)
|
1,467 | |||||||
|
Cash
|
85 | |||||||
|
Receivables
for:
|
||||||||
|
Sales
of investments
|
16,922 | |||||||
|
Sales
of fund's shares
|
276,039 | |||||||
|
Dividends
and interest
|
62,833 | 355,794 | ||||||
| 34,303,433 | ||||||||
|
Liabilities:
|
||||||||
|
Payables
for:
|
||||||||
|
Purchases
of investments
|
21,142 | |||||||
|
Repurchases
of fund's shares
|
169,386 | |||||||
|
Investment
advisory services
|
6,518 | |||||||
|
Services
provided by affiliates
|
14,496 | |||||||
|
Directors'
deferred compensation
|
1,826 | |||||||
|
Other
|
243 | 213,611 | ||||||
|
Net
assets at December 31, 2008
|
$ | 34,089,822 | ||||||
|
Net
assets consist of:
|
||||||||
|
Capital
paid in on shares of capital stock
|
$ | 44,360,313 | ||||||
|
Undistributed
net investment income
|
199,930 | |||||||
|
Accumulated
net realized loss
|
(3,033,957 | ) | ||||||
|
Net
unrealized depreciation
|
(7,436,464 | ) | ||||||
|
Net
assets at December 31, 2008
|
$ | 34,089,822 | ||||||
| (dollars and shares in thousands, except per-share amounts) | ||||||||||||
|
Total
authorized capital stock - 2,500,000 shares, $1.00 par value (1,365,030
total shares outstanding)
|
||||||||||||
|
Net
assets
|
Shares
outstanding
|
Net
asset value per share*
|
||||||||||
|
Class
A
|
$ | 24,443,154 | 978,357 | $ | 24.98 | |||||||
|
Class
B
|
924,219 | 37,088 | 24.92 | |||||||||
|
Class
C
|
1,468,473 | 58,985 | 24.90 | |||||||||
|
Class
F-1
|
2,931,565 | 117,383 | 24.97 | |||||||||
|
Class
F-2
|
91,669 | 3,669 | 24.98 | |||||||||
|
Class
529-A
|
484,971 | 19,422 | 24.97 | |||||||||
|
Class
529-B
|
54,050 | 2,166 | 24.96 | |||||||||
|
Class
529-C
|
146,821 | 5,884 | 24.95 | |||||||||
|
Class
529-E
|
21,291 | 853 | 24.95 | |||||||||
|
Class
529-F-1
|
19,922 | 799 | 24.95 | |||||||||
|
Class
R-1
|
60,566 | 2,433 | 24.90 | |||||||||
|
Class
R-2
|
366,059 | 14,710 | 24.89 | |||||||||
|
Class
R-3
|
1,058,385 | 42,440 | 24.94 | |||||||||
|
Class
R-4
|
941,588 | 37,745 | 24.95 | |||||||||
|
Class
R-5
|
1,077,089 | 43,096 | 24.99 | |||||||||
|
(*) Maximum
offering price and redemption price per share were equal to the net asset
value per share for all share classes, except for Classes A and 529-A, for
which the maximum offering prices per share were $26.50 and $26.49,
respectively.
|
||||||||||||
|
See Notes to
Financial Statements
|
||||||||||||
|
Statement
of operations
|
||||||||
|
for the year
ended December 31, 2008
|
(dollars in
thousands)
|
|||||||
|
Investment
income:
|
||||||||
|
Income:
|
||||||||
|
Dividends
(net of non-U.S.
|
||||||||
|
taxes
of $31,830; also includes
|
||||||||
|
$24,964
from affiliates)
|
$ | 939,641 | ||||||
|
Interest
|
117,332 | $ | 1,056,973 | |||||
|
Fees
and expenses*:
|
||||||||
|
Investment
advisory services
|
115,983 | |||||||
|
Distribution
services
|
139,155 | |||||||
|
Transfer
agent services
|
42,329 | |||||||
|
Administrative
services
|
16,120 | |||||||
|
Reports
to shareholders
|
3,317 | |||||||
|
Registration
statement and prospectus
|
2,046 | |||||||
|
Postage,
stationery and supplies
|
3,571 | |||||||
|
Directors'
compensation
|
(570 | ) | ||||||
|
Auditing
and legal
|
129 | |||||||
|
Custodian
|
1,217 | |||||||
|
State
and local taxes
|
1 | |||||||
|
Other
|
135 | |||||||
|
Total
fees and expenses before waiver
|
323,433 | |||||||
|
Less
investment advisory services waiver
|
11,598 | |||||||
|
Total
fees and expenses after waiver
|
311,835 | |||||||
|
Net
investment income
|
745,138 | |||||||
|
Net realized loss
and unrealized
|
||||||||
|
depreciation
on investments
|
||||||||
|
and
currency:
|
||||||||
|
Net
realized loss on:
|
||||||||
|
Investments
(including $137,783 net gain from affiliates)
|
(3,025,394 | ) | ||||||
|
Currency
transactions
|
(2,823 | ) | (3,028,217 | ) | ||||
|
Net
unrealized depreciation on:
|
||||||||
|
Investments
|
(19,833,532 | ) | ||||||
|
Currency
translations
|
(247 | ) | (19,833,779 | ) | ||||
|
Net
realized loss and
|
||||||||
|
unrealized
depreciation
|
||||||||
|
on
investments and currency
|
(22,861,996 | ) | ||||||
|
Net
decrease in net assets resulting
|
||||||||
|
from
operations
|
$ | (22,116,858 | ) | |||||
|
(*)
Additional information related to class-specific fees and expenses is
included in the Notes to Financial Statements.
|
||||||||
|
See Notes to
Financial Statements
|
||||||||
|
Statements
of changes in net assets
|
(dollars in thousands) | |||||||
|
Year ended
December 31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Operations:
|
||||||||
|
Net
investment income
|
$ | 745,138 | $ | 1,063,193 | ||||
|
Net
realized (loss) gain on investments
|
||||||||
|
and
currency transactions
|
(3,028,217 | ) | 2,686,389 | |||||
|
Net
unrealized (depreciation) appreciation on investments
|
||||||||
|
and
currency translations
|
(19,833,779 | ) | 1,808,390 | |||||
|
Net
(decrease) increase in net assets resulting from
operations
|
(22,116,858 | ) | 5,557,972 | |||||
|
Dividends
and distributions paid to
|
||||||||
|
shareholders
:
|
||||||||
|
Dividends
from net investment income
|
(721,047 | ) | (998,744 | ) | ||||
|
Distributions
from net realized gain on investments
|
(316,888 | ) | (2,310,752 | ) | ||||
|
Total
dividends and distributions paid to
shareholders
|
(1,037,935 | ) | (3,309,496 | ) | ||||
|
Net
capital share transactions
|
6,867,554 | 8,940,644 | ||||||
|
Total
(decrease) increase in net assets
|
(16,287,239 | ) | 11,189,120 | |||||
|
Net
assets:
|
||||||||
|
Beginning
of year
|
50,377,061 | 39,187,941 | ||||||
|
End of
year (including undistributed
|
||||||||
|
net
investment income: $199,930 and $179,577, respectively)
|
$ | 34,089,822 | $ | 50,377,061 | ||||
|
See Notes to
Financial Statements
|
||||||||
|
1.
|
Organization
and significant accounting policies
|
|
Share
class
|
Initial
sales charge
|
Contingent
deferred sales charge upon redemption
|
Conversion
feature
|
|
Classes A and
529-A
|
Up to
5.75%
|
None (except
1% for certain redemptions within one year of purchase without an initial
sales charge)
|
None
|
|
Classes B and
529-B
|
None
|
Declines from
5% to 0% for redemptions within six years of purchase
|
Classes B and
529-B convert to Classes A and 529-A, respectively, after eight
years
|
|
Class
C
|
None
|
1% for
redemptions within one year of purchase
|
Class C
converts to Class F-1 after 10 years
|
|
Class
529-C
|
None
|
1% for
redemptions within one year of purchase
|
None
|
|
Class
529-E
|
None
|
None
|
None
|
|
Classes F-1,
F-2 and 529-F-1
|
None
|
None
|
None
|
|
Classes R-1,
R-2, R-3, R-4 and R-5
|
None
|
None
|
None
|
|
2.
|
Risk
factors
|
| (dollars in thousands) | ||||
|
Undistributed
ordinary income
|
$ | 201,756 | ||
|
Capital loss
carryforward expiring in 2016*
|
(1,885,675 | ) | ||
|
Post-October
capital loss deferrals (realized during the period November 1, 2008,
through December 31, 2008)†
|
(1,140,924 | ) | ||
|
Gross
unrealized appreciation on investment securities
|
3,153,922 | |||
|
Gross
unrealized depreciation on investment securities
|
(10,597,471 | ) | ||
|
Net
unrealized depreciation on investment securities
|
(7,443,549 | ) | ||
|
Cost of
investment securities
|
41,389,636 | |||
|
*The capital
loss carryforward will be used to offset any capital gains realized by the
fund in future years through the expiration date. The fund will not make
distributions from capital gains while a capital loss carryforward
remains.
|
||||
|
† These deferrals are
considered incurred in the subsequent year.
|
||||
|
Year
ended December 31, 2008
|
Year
ended December 31, 2007
|
|||||||||||||||||||||||
|
Share
class
|
Ordinary
income
|
Long-term
capital gains
|
Total
distributions paid
|
Ordinary
income
|
Long-term
capital gains
|
Total
distributions paid
|
||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Class
A
|
$ | 557,598 | $ | 241,668 | $ | 799,266 | $ | 809,465 | $ | 1,788,460 | $ | 2,597,925 | ||||||||||||
|
Class
B
|
11,804 | 10,319 | 22,123 | 23,044 | 76,989 | 100,033 | ||||||||||||||||||
|
Class
C
|
16,584 | 13,050 | 29,634 | 26,701 | 93,931 | 120,632 | ||||||||||||||||||
|
Class
F-1
|
60,738 | 21,382 | 82,120 | 61,524 | 146,701 | 208,225 | ||||||||||||||||||
|
Class
F-2*
|
779 | - | 779 | - | - | - | ||||||||||||||||||
|
Class
529-A
|
9,941 | 4,136 | 14,077 | 12,265 | 29,043 | 41,308 | ||||||||||||||||||
|
Class
529-B
|
570 | 506 | 1,076 | 998 | 3,671 | 4,669 | ||||||||||||||||||
|
Class
529-C
|
1,515 | 1,251 | 2,766 | 2,393 | 8,837 | 11,230 | ||||||||||||||||||
|
Class
529-E
|
360 | 187 | 547 | 487 | 1,322 | 1,809 | ||||||||||||||||||
|
Class
529-F-1
|
424 | 134 | 558 | 404 | 908 | 1,312 | ||||||||||||||||||
|
Class
R-1
|
628 | 389 | 1,017 | 710 | 2,590 | 3,300 | ||||||||||||||||||
|
Class
R-2
|
3,842 | 3,036 | 6,878 | 6,021 | 21,466 | 27,487 | ||||||||||||||||||
|
Class
R-3
|
16,994 | 7,755 | 24,749 | 18,381 | 52,112 | 70,493 | ||||||||||||||||||
|
Class
R-4
|
17,908 | 6,485 | 24,393 | 16,207 | 39,566 | 55,773 | ||||||||||||||||||
|
Class
R-5
|
21,362 | 6,590 | 27,952 | 20,144 | 45,156 | 65,300 | ||||||||||||||||||
|
Total
|
$ | 721,047 | $ | 316,888 | $ | 1,037,935 | $ | 998,744 | $ | 2,310,752 | $ | 3,309,496 | ||||||||||||
|
* Class F-2
was offered beginning August 1, 2008.
|
||||||||||||||||||||||||
|
Share
class
|
Currently
approved limits
|
Plan
limits
|
|
Class
A
|
0.25%
|
0.25%
|
|
Class
529-A
|
0.25
|
0.50
|
|
Classes B and
529-B
|
1.00
|
1.00
|
|
Classes C,
529-C and R-1
|
1.00
|
1.00
|
|
Class
R-2
|
0.75
|
1.00
|
|
Classes 529-E
and R-3
|
0.50
|
0.75
|
|
Classes F-1,
529-F-1 and R-4
|
0.25
|
0.50
|
|
Share
class
|
Distribution
services
|
Transfer
agent services
|
Administrative
services
|
||
|
CRMC
administrative services
|
Transfer
agent services
|
Commonwealth
of Virginia administrative services
|
|||
|
Class
A
|
$80,557
|
$40,731
|
Not
applicable
|
Not
applicable
|
Not
applicable
|
|
Class
B
|
13,828
|
1,598
|
Not
applicable
|
Not
applicable
|
Not
applicable
|
|
Class
C
|
19,214
|
Included
in
administrative
services
|
$2,690
|
$365
|
Not
applicable
|
|
Class
F-1
|
8,841
|
3,367
|
304
|
Not
applicable
|
|
|
Class F-2
*
|
Not
applicable
|
21
|
3
|
Not
applicable
|
|
|
Class
529-A
|
1,199
|
565
|
87
|
$612
|
|
|
Class
529-B
|
719
|
66
|
21
|
72
|
|
|
Class
529-C
|
1,855
|
171
|
47
|
186
|
|
|
Class
529-E
|
136
|
25
|
4
|
27
|
|
|
Class
529-F-1
|
-
|
21
|
3
|
23
|
|
|
Class
R-1
|
655
|
63
|
44
|
Not
applicable
|
|
|
Class
R-2
|
3,405
|
681
|
1,457
|
Not
applicable
|
|
|
Class
R-3
|
6,137
|
1,840
|
703
|
Not
applicable
|
|
|
Class
R-4
|
2,609
|
1,542
|
45
|
Not
applicable
|
|
|
Class
R-5
|
Not
applicable
|
1,042
|
23
|
Not
applicable
|
|
|
Total
|
$139,155
|
$42,329
|
$12,094
|
$3,106
|
$920
|
| Investment securities | ||||
|
Level 1 –
Quoted prices
|
$ | 25,258,118 | ||
|
Level 2 –
Other significant observable inputs
|
8,687,969 | (*) | ||
|
Level 3 –
Significant unobservable inputs
|
- | |||
|
Total
|
$ | 33,946,087 | ||
|
Share
class
|
Sales(*)
|
Reinvestments
of dividends and distributions
|
Repurchases(*)
|
Net
increase (decrease)
|
||||||||||||||||||||||||||||
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
|||||||||||||||||||||||||
|
Year
ended December 31, 2008
|
||||||||||||||||||||||||||||||||
|
Class
A
|
$ | 7,911,594 | 231,401 | $ | 763,364 | 22,342 | $ | (6,050,793 | ) | (191,212 | ) | $ | 2,624,165 | 62,531 | ||||||||||||||||||
|
Class
B
|
276,235 | 7,940 | 21,439 | 636 | (363,229 | ) | (10,840 | ) | (65,555 | ) | (2,264 | ) | ||||||||||||||||||||
|
Class
C
|
785,133 | 22,623 | 28,519 | 865 | (416,578 | ) | (13,019 | ) | 397,074 | 10,469 | ||||||||||||||||||||||
|
Class
F-1
|
2,763,196 | 78,243 | 72,793 | 2,178 | (1,213,116 | ) | (39,270 | ) | 1,622,873 | 41,151 | ||||||||||||||||||||||
|
Class
F-2†
|
116,845 | 4,125 | 650 | 25 | (12,665 | ) | (481 | ) | 104,830 | 3,669 | ||||||||||||||||||||||
|
Class
529-A
|
190,435 | 5,390 | 14,075 | 417 | (50,723 | ) | (1,537 | ) | 153,787 | 4,270 | ||||||||||||||||||||||
|
Class
529-B
|
14,144 | 400 | 1,076 | 33 | (5,318 | ) | (159 | ) | 9,902 | 274 | ||||||||||||||||||||||
|
Class
529-C
|
62,565 | 1,765 | 2,766 | 84 | (19,014 | ) | (572 | ) | 46,317 | 1,277 | ||||||||||||||||||||||
|
Class
529-E
|
7,990 | 228 | 547 | 16 | (2,522 | ) | (75 | ) | 6,015 | 169 | ||||||||||||||||||||||
|
Class
529-F-1
|
14,406 | 390 | 558 | 17 | (2,864 | ) | (88 | ) | 12,100 | 319 | ||||||||||||||||||||||
|
Class
R-1
|
55,324 | 1,583 | 1,012 | 32 | (18,085 | ) | (537 | ) | 38,251 | 1,078 | ||||||||||||||||||||||
|
Class
R-2
|
240,522 | 6,876 | 6,875 | 210 | (120,579 | ) | (3,509 | ) | 126,818 | 3,577 | ||||||||||||||||||||||
|
Class
R-3
|
835,509 | 23,703 | 24,701 | 750 | (317,096 | ) | (9,313 | ) | 543,114 | 15,140 | ||||||||||||||||||||||
|
Class
R-4
|
850,916 | 23,655 | 24,370 | 735 | (258,547 | ) | (7,396 | ) | 616,739 | 16,994 | ||||||||||||||||||||||
|
Class
R-5
|
800,099 | 24,178 | 27,167 | 814 | (196,142 | ) | (5,773 | ) | 631,124 | 19,219 | ||||||||||||||||||||||
|
Total net
increase
|
||||||||||||||||||||||||||||||||
|
(decrease)
|
$ | 14,924,913 | 432,500 | $ | 989,912 | 29,154 | $ | (9,047,271 | ) | (283,781 | ) | $ | 6,867,554 | 177,873 | ||||||||||||||||||
|
Year
ended December 31, 2007
|
||||||||||||||||||||||||||||||||
|
Class
A
|
$ | 6,456,455 | 150,249 | $ | 2,483,027 | 58,072 | $ | (4,147,003 | ) | (96,202 | ) | $ | 4,792,479 | 112,119 | ||||||||||||||||||
|
Class
B
|
235,580 | 5,496 | 96,689 | 2,265 | (166,258 | ) | (3,864 | ) | 166,011 | 3,897 | ||||||||||||||||||||||
|
Class
C
|
687,356 | 16,009 | 116,095 | 2,721 | (205,156 | ) | (4,780 | ) | 598,295 | 13,950 | ||||||||||||||||||||||
|
Class
F-1
|
1,620,221 | 37,361 | 185,210 | 4,331 | (467,079 | ) | (10,793 | ) | 1,338,352 | 30,899 | ||||||||||||||||||||||
|
Class
529-A
|
195,316 | 4,545 | 41,303 | 966 | (30,624 | ) | (708 | ) | 205,995 | 4,803 | ||||||||||||||||||||||
|
Class
529-B
|
15,494 | 361 | 4,669 | 109 | (3,171 | ) | (73 | ) | 16,992 | 397 | ||||||||||||||||||||||
|
Class
529-C
|
63,670 | 1,483 | 11,229 | 263 | (12,819 | ) | (297 | ) | 62,080 | 1,449 | ||||||||||||||||||||||
|
Class
529-E
|
7,666 | 179 | 1,809 | 42 | (1,862 | ) | (43 | ) | 7,613 | 178 | ||||||||||||||||||||||
|
Class
529-F-1
|
9,733 | 225 | 1,312 | 31 | (2,366 | ) | (55 | ) | 8,679 | 201 | ||||||||||||||||||||||
|
Class
R-1
|
40,043 | 927 | 3,279 | 77 | (10,137 | ) | (236 | ) | 33,185 | 768 | ||||||||||||||||||||||
|
Class
R-2
|
238,540 | 5,572 | 27,471 | 644 | (101,887 | ) | (2,364 | ) | 164,124 | 3,852 | ||||||||||||||||||||||
|
Class
R-3
|
733,841 | 17,019 | 70,429 | 1,648 | (193,827 | ) | (4,485 | ) | 610,443 | 14,182 | ||||||||||||||||||||||
|
Class
R-4
|
506,361 | 11,794 | 55,763 | 1,306 | (143,084 | ) | (3,308 | ) | 419,040 | 9,792 | ||||||||||||||||||||||
|
Class
R-5
|
547,603 | 12,544 | 63,750 | 1,490 | (93,997 | ) | (2,173 | ) | 517,356 | 11,861 | ||||||||||||||||||||||
|
Total net
increase
|
||||||||||||||||||||||||||||||||
|
(decrease)
|
$ | 11,357,879 | 263,764 | $ | 3,162,035 | 73,965 | $ | (5,579,270 | ) | (129,381 | ) | $ | 8,940,644 | 208,348 | ||||||||||||||||||
|
(*) Includes
exchanges between share classes of the fund.
|
||||||||||||||||||||||||||||||||
|
† Class F-2
was offered beginning August 1, 2008.
|
||||||||||||||||||||||||||||||||
|
(Loss) income
from investment operations(2)
|
Dividends and
distributions
|
|||||||||||||||
|
Net asset
value, beginning of period
|
Net investment
income (3)
|
Net (losses)
gains on securities (both realized and unrealized)
|
Total from
investment operations
|
Dividends
(from net investment income)
|
Distributions
(from capital gains)
|
Total
dividends and distributions
|
Net asset
value, end of period
|
Total return (4)
(5)
|
Net assets,
end of period (in millions)
|
Ratio of
expenses to average net assets before reimbursements
/waivers
|
Ratio of expenses to average net
assets after reimbursements
/waivers
(5)
|
Ratio of net income to average net
assets (3) (5)
|
||||
|
Class
A:
|
||||||||||||||||
|
Year
ended 12/31/2008
|
$42.45
|
$.60
|
$ |
(17.23)
|
$(16.63)
|
$(.58)
|
$(.26)
|
$(.84)
|
$24.98
|
(39.70%)
|
$24,443
|
.63%
|
.61%
|
1.70%
|
||
|
Year
ended 12/31/2007
|
40.05
|
1.03
|
4.39
|
5.42
|
(.95)
|
(2.07)
|
(3.02)
|
42.45
|
13.55
|
38,877
|
.60
|
.57
|
2.40
|
|||
|
Year
ended 12/31/2006
|
35.40
|
.62
|
6.16
|
6.78
|
(.56)
|
(1.57)
|
(2.13)
|
40.05
|
19.24
|
32,187
|
.61
|
.58
|
1.60
|
|||
|
Year
ended 12/31/2005
|
32.25
|
.58
|
3.16
|
3.74
|
(.59)
|
-
|
(.59)
|
35.40
|
11.68
|
24,390
|
.62
|
.60
|
1.75
|
|||
|
Year
ended 12/31/2004
|
28.85
|
.61
|
3.35
|
3.96
|
(.56)
|
-
|
(.56)
|
32.25
|
13.91
|
21,543
|
.63
|
.63
|
2.05
|
|||
|
Class
B:
|
||||||||||||||||
|
Year
ended 12/31/2008
|
42.35
|
.34
|
(17.20)
|
(16.86)
|
(.31)
|
(.26)
|
(.57)
|
24.92
|
(40.14)
|
924
|
1.39
|
1.37
|
.94
|
|||
|
Year
ended 12/31/2007
|
39.96
|
.70
|
4.38
|
5.08
|
(.62)
|
(2.07)
|
(2.69)
|
42.35
|
12.70
|
1,667
|
1.36
|
1.33
|
1.63
|
|||
|
Year
ended 12/31/2006
|
35.33
|
.32
|
6.14
|
6.46
|
(.26)
|
(1.57)
|
(1.83)
|
39.96
|
18.33
|
1,417
|
1.38
|
1.35
|
.83
|
|||
|
Year
ended 12/31/2005
|
32.19
|
.33
|
3.15
|
3.48
|
(.34)
|
-
|
(.34)
|
35.33
|
10.84
|
1,090
|
1.39
|
1.36
|
.99
|
|||
|
Year
ended 12/31/2004
|
28.80
|
.38
|
3.35
|
3.73
|
(.34)
|
-
|
(.34)
|
32.19
|
13.03
|
971
|
1.40
|
1.39
|
1.29
|
|||
|
Class
C:
|
||||||||||||||||
|
Year
ended 12/31/2008
|
42.31
|
.32
|
(17.17)
|
(16.85)
|
(.30)
|
(.26)
|
(.56)
|
24.90
|
(40.16)
|
1,468
|
1.43
|
1.41
|
.90
|
|||
|
Year
ended 12/31/2007
|
39.92
|
.70
|
4.36
|
5.06
|
(.60)
|
(2.07)
|
(2.67)
|
42.31
|
12.65
|
2,053
|
1.41
|
1.38
|
1.62
|
|||
|
Year
ended 12/31/2006
|
35.30
|
.30
|
6.13
|
6.43
|
(.24)
|
(1.57)
|
(1.81)
|
39.92
|
18.23
|
1,380
|
1.43
|
1.41
|
.77
|
|||
|
Year
ended 12/31/2005
|
32.17
|
.30
|
3.15
|
3.45
|
(.32)
|
-
|
(.32)
|
35.30
|
10.76
|
776
|
1.45
|
1.43
|
.91
|
|||
|
Year
ended 12/31/2004
|
28.78
|
.37
|
3.34
|
3.71
|
(.32)
|
-
|
(.32)
|
32.17
|
12.96
|
566
|
1.47
|
1.46
|
1.24
|
|||
|
Class
F-1:
|
||||||||||||||||
|
Year
ended 12/31/2008
|
42.43
|
.60
|
(17.22)
|
(16.62)
|
(.58)
|
(.26)
|
(.84)
|
24.97
|
(39.69)
|
2,932
|
.62
|
.60
|
1.72
|
|||
|
Year
ended 12/31/2007
|
40.03
|
1.06
|
4.36
|
5.42
|
(.95)
|
(2.07)
|
(3.02)
|
42.43
|
13.55
|
3,235
|
.61
|
.58
|
2.45
|
|||
|
Year
ended 12/31/2006
|
35.39
|
.62
|
6.15
|
6.77
|
(.56)
|
(1.57)
|
(2.13)
|
40.03
|
19.21
|
1,815
|
.61
|
.58
|
1.58
|
|||
|
Year
ended 12/31/2005
|
32.24
|
.57
|
3.16
|
3.73
|
(.58)
|
-
|
(.58)
|
35.39
|
11.64
|
662
|
.66
|
.63
|
1.71
|
|||
|
Year
ended 12/31/2004
|
28.84
|
.59
|
3.35
|
3.94
|
(.54)
|
-
|
(.54)
|
32.24
|
13.84
|
463
|
.70
|
.70
|
2.02
|
|||
|
Class
F-2:
|
||||||||||||||||
|
Period
from 8/1/2008 to 12/31/2008
|
37.09
|
.23
|
(11.97)
|
(11.74)
|
(.37)
|
-
|
(.37)
|
24.98
|
(31.78)
|
92
|
.17
|
.16
|
.88
|
|||
|
Class
529-A:
|
||||||||||||||||
|
Year
ended 12/31/2008
|
42.42
|
.58
|
(17.21)
|
(16.63)
|
(.56)
|
(.26)
|
(.82)
|
24.97
|
(39.71)
|
485
|
.68
|
.65
|
1.66
|
|||
|
Year
ended 12/31/2007
|
40.02
|
1.03
|
4.36
|
5.39
|
(.92)
|
(2.07)
|
(2.99)
|
42.42
|
13.49
|
643
|
.66
|
.64
|
2.37
|
|||
|
Year
ended 12/31/2006
|
35.38
|
.60
|
6.15
|
6.75
|
(.54)
|
(1.57)
|
(2.11)
|
40.02
|
19.16
|
414
|
.66
|
.63
|
1.55
|
|||
|
Year
ended 12/31/2005
|
32.24
|
.55
|
3.15
|
3.70
|
(.56)
|
-
|
(.56)
|
35.38
|
11.60
|
231
|
.70
|
.67
|
1.66
|
|||
|
Year
ended 12/31/2004
|
28.84
|
.59
|
3.34
|
3.93
|
(.53)
|
-
|
(.53)
|
32.24
|
13.77
|
146
|
.73
|
.72
|
2.00
|
|||
|
Class
529-B:
|
||||||||||||||||
|
Year
ended 12/31/2008
|
42.41
|
.30
|
(17.22)
|
(16.92)
|
(.27)
|
(.26)
|
(.53)
|
24.96
|
(40.20)
|
54
|
1.50
|
1.47
|
.84
|
|||
|
Year
ended 12/31/2007
|
40.01
|
.66
|
4.38
|
5.04
|
(.57)
|
(2.07)
|
(2.64)
|
42.41
|
12.57
|
80
|
1.48
|
1.46
|
1.53
|
|||
|
Year
ended 12/31/2006
|
35.37
|
.27
|
6.16
|
6.43
|
(.22)
|
(1.57)
|
(1.79)
|
40.01
|
18.18
|
60
|
1.50
|
1.47
|
.71
|
|||
|
Year
ended 12/31/2005
|
32.23
|
.27
|
3.16
|
3.43
|
(.29)
|
-
|
(.29)
|
35.37
|
10.66
|
40
|
1.54
|
1.52
|
.82
|
|||
|
Year
ended 12/31/2004
|
28.83
|
.33
|
3.35
|
3.68
|
(.28)
|
-
|
(.28)
|
32.23
|
12.83
|
29
|
1.59
|
1.59
|
1.13
|
|||
|
Class
529-C:
|
||||||||||||||||
|
Year
ended 12/31/2008
|
42.40
|
.30
|
(17.22)
|
(16.92)
|
(.27)
|
(.26)
|
(.53)
|
24.95
|
(40.21)
|
147
|
1.49
|
1.47
|
.85
|
|||
|
Year
ended 12/31/2007
|
40.00
|
.67
|
4.37
|
5.04
|
(.57)
|
(2.07)
|
(2.64)
|
42.40
|
12.58
|
195
|
1.48
|
1.45
|
1.56
|
|||
|
Year
ended 12/31/2006
|
35.37
|
.28
|
6.14
|
6.42
|
(.22)
|
(1.57)
|
(1.79)
|
40.00
|
18.16
|
126
|
1.49
|
1.47
|
.71
|
|||
|
Year
ended 12/31/2005
|
32.23
|
.27
|
3.16
|
3.43
|
(.29)
|
-
|
(.29)
|
35.37
|
10.68
|
71
|
1.53
|
1.51
|
.83
|
|||
|
Year
ended 12/31/2004
|
28.83
|
.34
|
3.34
|
3.68
|
(.28)
|
-
|
(.28)
|
32.23
|
12.84
|
45
|
1.58
|
1.58
|
1.14
|
|||
|
Class
529-E:
|
||||||||||||||||
|
Year
ended 12/31/2008
|
42.40
|
.48
|
(17.21)
|
(16.73)
|
(.46)
|
(.26)
|
(.72)
|
24.95
|
(39.90)
|
21
|
.98
|
.96
|
1.36
|
|||
|
Year
ended 12/31/2007
|
40.00
|
.88
|
4.38
|
5.26
|
(.79)
|
(2.07)
|
(2.86)
|
42.40
|
13.14
|
29
|
.97
|
.95
|
2.05
|
|||
|
Year
ended 12/31/2006
|
35.36
|
.48
|
6.15
|
6.63
|
(.42)
|
(1.57)
|
(1.99)
|
40.00
|
18.80
|
20
|
.97
|
.95
|
1.23
|
|||
|
Year
ended 12/31/2005
|
32.23
|
.44
|
3.15
|
3.59
|
(.46)
|
-
|
(.46)
|
35.36
|
11.24
|
12
|
1.02
|
.99
|
1.34
|
|||
|
Year
ended 12/31/2004
|
28.83
|
.49
|
3.35
|
3.84
|
(.44)
|
-
|
(.44)
|
32.23
|
13.40
|
7
|
1.06
|
1.05
|
1.66
|
|||
|
Class
529-F-1:
|
||||||||||||||||
|
Year
ended 12/31/2008
|
$42.39
|
$.64
|
$ |
(17.19)
|
$(16.55)
|
$(.63)
|
$(.26)
|
$(.89)
|
$24.95
|
(39.59%)
|
$20
|
.48%
|
.46%
|
1.84%
|
||
|
Year
ended 12/31/2007
|
40.00
|
1.13
|
4.33
|
5.46
|
(1.00)
|
(2.07)
|
(3.07)
|
42.39
|
13.69
|
20
|
.47
|
.45
|
2.62
|
|||
|
Year
ended 12/31/2006
|
35.36
|
.67
|
6.15
|
6.82
|
(.61)
|
(1.57)
|
(2.18)
|
40.00
|
19.40
|
11
|
.47
|
.45
|
1.73
|
|||
|
Year
ended 12/31/2005
|
32.22
|
.59
|
3.15
|
3.74
|
(.60)
|
-
|
(.60)
|
35.36
|
11.68
|
5
|
.58
|
.56
|
1.76
|
|||
|
Year
ended 12/31/2004
|
28.82
|
.58
|
3.33
|
3.91
|
(.51)
|
-
|
(.51)
|
32.22
|
13.73
|
2
|
.81
|
.80
|
1.95
|
|||
|
Class
R-1:
|
||||||||||||||||
|
Year
ended 12/31/2008
|
42.31
|
.32
|
(17.18)
|
(16.86)
|
(.29)
|
(.26)
|
(.55)
|
24.90
|
(40.16)
|
61
|
1.43
|
1.41
|
.91
|
|||
|
Year
ended 12/31/2007
|
39.93
|
.72
|
4.33
|
5.05
|
(.60)
|
(2.07)
|
(2.67)
|
42.31
|
12.62
|
57
|
1.44
|
1.42
|
1.67
|
|||
|
Year
ended 12/31/2006
|
35.31
|
.29
|
6.13
|
6.42
|
(.23)
|
(1.57)
|
(1.80)
|
39.93
|
18.19
|
23
|
1.47
|
1.43
|
.74
|
|||
|
Year
ended 12/31/2005
|
32.18
|
.29
|
3.16
|
3.45
|
(.32)
|
-
|
(.32)
|
35.31
|
10.74
|
11
|
1.50
|
1.46
|
.88
|
|||
|
Year
ended 12/31/2004
|
28.79
|
.37
|
3.33
|
3.70
|
(.31)
|
-
|
(.31)
|
32.18
|
12.92
|
6
|
1.53
|
1.49
|
1.26
|
|||
|
Class
R-2:
|
||||||||||||||||
|
Year
ended 12/31/2008
|
42.30
|
.30
|
(17.17)
|
(16.87)
|
(.28)
|
(.26)
|
(.54)
|
24.89
|
(40.19)
|
366
|
1.49
|
1.47
|
.85
|
|||
|
Year
ended 12/31/2007
|
39.92
|
.70
|
4.34
|
5.04
|
(.59)
|
(2.07)
|
(2.66)
|
42.30
|
12.61
|
471
|
1.46
|
1.40
|
1.62
|
|||
|
Year
ended 12/31/2006
|
35.29
|
.30
|
6.14
|
6.44
|
(.24)
|
(1.57)
|
(1.81)
|
39.92
|
18.26
|
291
|
1.54
|
1.41
|
.77
|
|||
|
Year
ended 12/31/2005
|
32.17
|
.30
|
3.14
|
3.44
|
(.32)
|
-
|
(.32)
|
35.29
|
10.73
|
155
|
1.64
|
1.43
|
.91
|
|||
|
Year
ended 12/31/2004
|
28.77
|
.38
|
3.34
|
3.72
|
(.32)
|
-
|
(.32)
|
32.17
|
13.02
|
93
|
1.76
|
1.45
|
1.29
|
|||
|
Class
R-3:
|
||||||||||||||||
|
Year
ended 12/31/2008
|
42.38
|
.48
|
(17.20)
|
(16.72)
|
(.46)
|
(.26)
|
(.72)
|
24.94
|
(39.89)
|
1,058
|
.98
|
.95
|
1.37
|
|||
|
Year
ended 12/31/2007
|
39.98
|
.92
|
4.34
|
5.26
|
(.79)
|
(2.07)
|
(2.86)
|
42.38
|
13.17
|
1,157
|
.97
|
.94
|
2.12
|
|||
|
Year
ended 12/31/2006
|
35.35
|
.47
|
6.14
|
6.61
|
(.41)
|
(1.57)
|
(1.98)
|
39.98
|
18.75
|
525
|
.99
|
.96
|
1.21
|
|||
|
Year
ended 12/31/2005
|
32.21
|
.45
|
3.16
|
3.61
|
(.47)
|
-
|
(.47)
|
35.35
|
11.26
|
220
|
1.01
|
.98
|
1.35
|
|||
|
Year
ended 12/31/2004
|
28.82
|
.50
|
3.33
|
3.83
|
(.44)
|
-
|
(.44)
|
32.21
|
13.41
|
125
|
1.05
|
1.04
|
1.69
|
|||
|
Class
R-4:
|
||||||||||||||||
|
Year
ended 12/31/2008
|
42.39
|
.58
|
(17.19)
|
(16.61)
|
(.57)
|
(.26)
|
(.83)
|
24.95
|
(39.70)
|
942
|
.67
|
.65
|
1.68
|
|||
|
Year
ended 12/31/2007
|
39.99
|
1.05
|
4.34
|
5.39
|
(.92)
|
(2.07)
|
(2.99)
|
42.39
|
13.51
|
879
|
.66
|
.64
|
2.42
|
|||
|
Year
ended 12/31/2006
|
35.36
|
.59
|
6.14
|
6.73
|
(.53)
|
(1.57)
|
(2.10)
|
39.99
|
19.12
|
438
|
.67
|
.65
|
1.52
|
|||
|
Year
ended 12/31/2005
|
32.22
|
.55
|
3.16
|
3.71
|
(.57)
|
-
|
(.57)
|
35.36
|
11.61
|
205
|
.69
|
.66
|
1.66
|
|||
|
Year
ended 12/31/2004
|
28.83
|
.60
|
3.33
|
3.93
|
(.54)
|
-
|
(.54)
|
32.22
|
13.85
|
80
|
.69
|
.69
|
2.04
|
|||
|
Class
R-5:
|
||||||||||||||||
|
Year
ended 12/31/2008
|
42.46
|
.69
|
(17.23)
|
(16.54)
|
(.67)
|
(.26)
|
(.93)
|
24.99
|
(39.53)
|
1,077
|
.37
|
.35
|
1.98
|
|||
|
Year
ended 12/31/2007
|
40.06
|
1.18
|
4.34
|
5.52
|
(1.05)
|
(2.07)
|
(3.12)
|
42.46
|
13.81
|
1,014
|
.37
|
.34
|
2.73
|
|||
|
Year
ended 12/31/2006
|
35.41
|
.71
|
6.16
|
6.87
|
(.65)
|
(1.57)
|
(2.22)
|
40.06
|
19.50
|
481
|
.38
|
.35
|
1.83
|
|||
|
Year
ended 12/31/2005
|
32.26
|
.65
|
3.17
|
3.82
|
(.67)
|
-
|
(.67)
|
35.41
|
11.94
|
265
|
.39
|
.36
|
1.96
|
|||
|
Year
ended 12/31/2004
|
28.86
|
.68
|
3.35
|
4.03
|
(.63)
|
-
|
(.63)
|
32.26
|
14.19
|
141
|
.39
|
.39
|
2.31
|
|||
|
Year
ended December 31
|
||||||||||||||||||||
|
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
|
Portfolio
turnover rate for all classes of shares
|
29 | % | 27 | % | 21 | % | 24 | % | 30 | % | ||||||||||
|
(1) Based on
operations for the periods shown (unless otherwise noted) and,
accordingly, may not be representative of a full year.
|
|
(2) Based on
average shares outstanding.
|
|
(3) For the
year ended December 31, 2007, this column reflects the impact of a
corporate action event that
|
|
resulted
in a one-time increase to net investment income. If the corporate action
had not occurred,
|
|
the
Class A net investment income per share and ratio of net income to average
net assets would
|
|
have
been lower by $0.39 and 0.90%, respectively. The impact to the other share
classes would have
|
|
been
approximately the same.
|
|
(4) Total
returns exclude any applicable sales charges, including contingent
deferred sales charges.
|
|
(5) This
column reflects the impact, if any, of certain reimbursements/waivers from
CRMC.
|
|
During
the periods shown, CRMC reduced fees for investment advisory services. In
addition, during
|
|
some
of the periods shown, CRMC paid a portion of the fund's transfer agent
fees for certain retirement plan share classes.
|
|
See Notes to
Financial Statements
|
|
Long-term
capital gains
|
$ | 316,888,000 | ||
|
Qualified
dividend income
|
100 | % | ||
|
Corporate
dividends received deduction
|
$ | 626,660,000 | ||
|
U.S.
government income that may be exempt from state taxation
|
$ | 19,248,000 |
<PAGE>
[Logo - American Funds/(R)/] The right choice for the long term/(R)/
Fundamental Investors/SM/
RETIREMENT PLAN
PROSPECTUS
March 1, 2009
TABLE OF CONTENTS
1 Risk/Return summary
4 Fees and expenses of the fund
6 Investment objective, strategies and risks
10 Management and organization
14 Purchase, exchange and sale of shares
17 Sales charges
19 Sales charge reductions
21 Rollovers from retirement plans to IRAs
21 Plans of distribution
22 Other compensation to dealers
23 Distributions and taxes
24 Financial highlights
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF
THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
[This page intentionally left blank for this filing]
<PAGE>
Risk/Return summary
The fund seeks to make your investment grow and provide you with income over
time by investing primarily in common stocks of large, established companies
that offer growth potential at reasonable prices. The fund may also invest
significantly in securities of issuers domiciled outside the United States.
The fund is designed for investors seeking both capital appreciation and income.
Your investment in the fund is subject to risks, including the possibility that
the fund's income and the value of its portfolio holdings may fluctuate in
response to events specific to the companies or markets in which the fund
invests, as well as economic, political or social events in the United States or
abroad.
Although all securities in the fund's portfolio may be adversely affected by
currency fluctuations or global economic, political or social instability,
securities issued by entities based outside the United States may be affected to
a greater extent.
Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.
1
Fundamental Investors / Prospectus
<PAGE>
HISTORICAL INVESTMENT RESULTS
The bar chart below shows how the fund's investment results have varied from
year to year, and the Investment Results table on page 3 shows how the fund's
average annual total returns for various periods compare with different broad
measures of market performance. This information provides some indication of the
risks of investing in the fund. All fund results reflect the reinvestment of
dividends and capital gain distributions, if any. Unless otherwise noted, fund
results reflect any fee waivers and/or expense reimbursements in effect during
the period presented. Past results are not predictive of future results.
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if a sales charge were included,
results would be lower.)
[begin bar chart]
1999 24.58%
2000 4.27
2001 -9.55
2002 -17.34
2003 31.96
2004 13.91
2005 11.68
2006 19.24
2007 13.55
2008 -39.70
[end bar chart]
Highest/Lowest quarterly results during this time period were:
HIGHEST 16.28% (quarter ended December 31, 2003)
LOWEST -23.34% (quarter ended December 31, 2008)
2
Fundamental Investors / Prospectus
<PAGE>
Unlike the bar chart on the previous page, the Investment Results table below
reflects, as required by Securities and Exchange Commission rules, the fund's
investment results with the following maximum initial sales charge imposed:
. Class A share results reflect the maximum initial sales charge of 5.75%. This
charge is reduced for purchases of $25,000 or more and eliminated for
purchases of $1 million or more.
. Class R shares are sold without any initial sales charge.
Results would be higher if calculated without a sales charge.
Unlike the Investment Results table below, the Additional Investment Results
table on page 8 reflects the fund's results calculated without a sales charge.
INVESTMENT RESULTS (WITH A MAXIMUM SALES CHARGE)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2008:
1 YEAR 5 YEARS 10 YEARS LIFETIME/1/
-------------------------------------------------------------------------
CLASS A -- FROM 8/1/78 -43.16% -0.42% 2.30% 11.63%
1 YEAR 5 YEARS LIFETIME/1/
-----------------------------------------------------------------
CLASS R-1 -- FIRST SOLD 6/19/02 -40.16% -0.08% 1.78%
CLASS R-2 -- FIRST SOLD 5/21/02 -40.19 -0.07 0.99
CLASS R-3 -- FIRST SOLD 6/4/02 -39.89 0.38 1.86
CLASS R-4 -- FIRST SOLD 7/25/02 -39.70 0.71 5.54
CLASS R-5 -- FIRST SOLD 5/15/02 -39.53 1.00 1.94
1 YEAR 5 YEARS 10 YEARS LIFETIME/2/
-------------------------------------------------------------------------------
INDEXES
S&P 500/3/ -36.99% -2.19% -1.38% 10.74%
Lipper Growth & Income -37.54 -2.12 -0.24 10.04
Funds Index/4/
MSCI World Index/5/ -40.33 0.00 -0.19 9.78
Class A annualized 30-day yield at December 31, 2008: 2.04%/6/
(For current yield information, please call American FundsLine/(R)/ at
800/325-3590.)
1 Lifetime results for Class A shares are measured from August 1, 1978, when
Capital Research and Management Company became the fund's investment adviser.
Lifetime results for other share classes are measured from the date the share
class was first sold.
2 Lifetime results for the index(es) shown are measured from the date Capital
Research and Management Company became the fund's investment adviser. The funds
or securities that compose each index may vary over time.
3 Standard & Poor's 500 Composite Index is a market capitalization-weighted
index based on the average weighted performance of 500 widely held common
stocks. This index is unmanaged and its results include reinvested dividends
and/ or distributions, but do not reflect sales charges, commissions, expenses
or taxes.
4 Lipper Growth & Income Funds Index is an equally weighted index of funds that
combine a growth-of-earnings orientation and an income requirement for level
and/or rising dividends. The results of the underlying funds in the index
include the reinvestment of dividends and capital gain distributions, as well
as brokerage commissions paid by the funds for portfolio transactions, but do
not reflect sales charges or taxes.
5 MSCI World Index is a free float-adjusted, market capitalization weighted
index that is designed to measure equity market performance of developed
markets. The index consists of 23 developed country indexes, including the
United States. This index is unmanaged and its results include reinvested
dividends and/or distributions, but do not reflect sales charges, commissions,
expenses or taxes.
6 Reflects a fee waiver (2.02% without the waiver) as described in the Annual
Fund Operating Expenses table under "Fees and expenses of the fund."
3
Fundamental Investors / Prospectus
<PAGE>
Fees and expenses of the fund
These tables describe the fees and expenses that you may pay if you buy and hold
shares of the fund.
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A ALL R SHARE CLASSES
------------------------------------------------------------------------------
Maximum initial sales charge on purchases 5.75%/*/ none
(as a percentage of offering price)
------------------------------------------------------------------------------
Maximum sales charge on reinvested dividends none none
------------------------------------------------------------------------------
Maximum contingent deferred sales charge none none
------------------------------------------------------------------------------
Redemption or exchange fees none none
* The initial sales charge is reduced for purchases of $25,000 or more and
eliminated for purchases of $1 million or more.
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
CLASS CLASS CLASS CLASS CLASS
CLASS A R-1 R-2 R-3 R-4 R-5
-------------------------------------------------------------------------------
Management fees/1/ 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
-------------------------------------------------------------------------------
Distribution and/or service 0.24 1.00 0.75 0.50 0.25 none
(12b-1) fees/2/
-------------------------------------------------------------------------------
Other expenses/1/ 0.14 0.18 0.49 0.23 0.17 0.12
-------------------------------------------------------------------------------
Total annual fund operating 0.63 1.43 1.49 0.98 0.67 0.37
expenses/1/
-------------------------------------------------------------------------------
1 The fund's investment adviser waived a portion of its management fees from
September 1, 2004, through December 31, 2008. In addition, the investment
adviser paid a portion of the fund's transfer agent fees for certain R share
classes. Management fees, other expenses and total annual fund operating
expenses in the table do not reflect any waiver or reimbursement. Information
regarding the effect of any waiver/reimbursement on total annual fund operating
expenses can be found in the Financial Highlights table in this prospectus and
in the fund's annual report.
2 Class A, R-1, R-2, R-3 and R-4 12b-1 fees may not exceed .25%, 1.00%, 1.00%,
.75% and .50%, respectively, of the class's average net assets annually.
4
Fundamental Investors / Prospectus
<PAGE>
OTHER EXPENSES
The "Other expenses" items in the table above include custodial, legal, transfer
agent and subtransfer agent/recordkeeping payments, as well as various other
expenses. Subtransfer agent/recordkeeping payments may be made to the fund's
investment adviser, affiliates of the adviser and unaffiliated third parties for
providing recordkeeping and other administrative services to retirement plans
invested in the fund in lieu of the transfer agent providing such services. The
amount paid for subtransfer agent/recordkeeping services will vary depending on
the share class selected and the entity receiving the payments. The table below
shows the maximum payments to entities providing services to retirement plans.
PAYMENTS TO AFFILIATED ENTITIES PAYMENTS TO UNAFFILIATED
ENTITIES
-------------------------------------------------------------------------------
Class A .05% of assets or .05% of assets or
$12 per participant position/1/ $12 per participant position/1/
-------------------------------------------------------------------------------
Class R-1 .10% of assets .10% of assets
-------------------------------------------------------------------------------
Class R-2 .15% of assets plus $27 per .25% of assets
participant position/2/ or .35%
of assets/3/
-------------------------------------------------------------------------------
Class R-3 .10% of assets plus $12 per .15% of assets
participant position/2/ or .19%
of assets/3/
Class R-4 .10% of assets .10% of assets
-------------------------------------------------------------------------------
Class R-5 .05% of assets .05% of assets
-------------------------------------------------------------------------------
1 Payment amount depends on the date upon which services commenced.
2 Payment with respect to Recordkeeper Direct/(R)/ program.
3 Payment with respect to PlanPremier/(R)/ program.
EXAMPLES
The examples below are intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The examples do not reflect the impact of any fee waivers
or expense reimbursements.
Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------
Class A* $636 $765 $906 $1,316
--------------------------------------------------------------------
Class R-1 146 452 782 1,713
--------------------------------------------------------------------
Class R-2 152 471 813 1,779
--------------------------------------------------------------------
Class R-3 100 312 542 1,201
--------------------------------------------------------------------
Class R-4 68 214 373 835
--------------------------------------------------------------------
Class R-5 38 119 208 468
--------------------------------------------------------------------
* Reflects the maximum initial sales charge.
5
Fundamental Investors / Prospectus
<PAGE>
Investment objective, strategies and risks
The fund's investment objective is to achieve long-term growth of capital and
income. The fund invests primarily in common stocks or securities convertible
into common stocks and may invest significantly in securities of issuers
domiciled outside the United States and Canada and not included in the Standard
& Poor's 500 Composite Index.
The prices of, and the income generated by, securities held by the fund may
decline in response to certain events, including those directly involving the
companies whose securities are owned by the fund; conditions affecting the
general economy; overall market changes; local, regional or global political,
social or economic instability; and currency, interest rate and commodity price
fluctuations.
Investments in securities issued by entities based outside the United States may
be subject to the risks described above to a greater extent and may also be
affected by currency fluctuations and controls; different accounting, auditing,
financial reporting, and legal standards and practices in some countries;
expropriation; changes in tax policy; greater market volatility; differing
securities market structures; higher transaction costs; and various
administrative difficulties, such as delays in clearing and settling portfolio
transactions or in receiving payment of dividends. These risks may be heightened
in connection with investments in developing countries. Investments in
securities issued by entities domiciled in the United States may also be subject
to many of these risks.
The fund may also hold cash or money market instruments. The percentage of the
fund invested in such holdings varies and depends on various factors, including
market conditions and purchases and redemptions of fund shares. A larger
percentage of such holdings could moderate the fund's investment results in a
period of rising market prices.
A larger percentage of cash or money market instruments could reduce the
magnitude of the fund's loss in a period of falling market prices and provide
liquidity to make additional investments or to meet redemptions.
The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively valued
companies that, in its opinion, represent above-average, long-term investment
opportunities. The investment adviser believes that an important way to
accomplish this is through fundamental analysis, which may include meeting with
company executives and employees, suppliers, customers and competitors.
Securities may be sold when the investment adviser believes that they no longer
represent relatively attractive investment opportunities.
6
Fundamental Investors / Prospectus
<PAGE>
OTHER IMPORTANT INVESTMENT PRACTICES
In addition to the principal investment strategies described above, the fund has
other investment practices that are described in this prospectus and in the
statement of additional information.
The fund may invest to a limited extent in lower quality debt securities rated
Ba1 and BB+ or below or unrated but determined by the investment adviser to be
of equivalent quality. The prices of debt securities fluctuate depending on such
factors as changing interest rates, effective maturities and credit ratings. For
example, their prices generally decline when interest rates rise and vice versa.
Lower quality or longer maturity debt securities generally have higher rates of
interest and may be subject to greater price fluctuations than higher quality or
shorter maturity debt securities.
ADDITIONAL INVESTMENT RESULTS
Unlike the Investment Results table on page 3, the table on page 8 reflects the
fund's results calculated without a sales charge.
7
Fundamental Investors / Prospectus
<PAGE>
ADDITIONAL INVESTMENT RESULTS (WITHOUT A SALES CHARGE)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2008:
1 YEAR 5 YEARS 10 YEARS LIFETIME/1/
-------------------------------------------------------------------------
CLASS A -- FROM 8/1/78 -39.70% 0.76% 2.90% 11.85%
1 YEAR 5 YEARS LIFETIME/1/
-----------------------------------------------------------------
CLASS R-1 -- FIRST SOLD 6/19/02 -40.16% -0.08% 1.78%
CLASS R-2 -- FIRST SOLD 5/21/02 -40.19 -0.07 0.99
CLASS R-3 -- FIRST SOLD 6/4/02 -39.89 0.38 1.86
CLASS R-4 -- FIRST SOLD 7/25/02 -39.70 0.71 5.54
CLASS R-5 -- FIRST SOLD 5/15/02 -39.53 1.00 1.94
1 YEAR 5 YEARS 10 YEARS LIFETIME/2/
-------------------------------------------------------------------------------
INDEXES
S&P 500/3/ -36.99% -2.19% -1.38% 10.74%
Lipper Growth & Income -37.54 -2.12 -0.24 10.04
Funds Index/4/
MSCI World Index/5/ -40.33 0.00 -0.19 9.78
Class A distribution rate at December 31, 2008: 2.30%/6/
(For current distribution rate information, please call American FundsLine
at 800/325-3590.)
1 Lifetime results for Class A shares are measured from August 1, 1978, when
Capital Research and Management Company became the fund's investment adviser.
Lifetime results for other share classes are measured from the date the share
class was first sold.
2 Lifetime results for the index(es) shown are measured from the date Capital
Research and Management Company became the fund's investment adviser. The funds
or securities that compose each index may vary over time.
3 Standard & Poor's 500 Composite Index is a market capitalization-weighted
index based on the average weighted performance of 500 widely held common
stocks. This index is unmanaged and its results include reinvested dividends
and/ or distributions, but do not reflect sales charges, commissions, expenses
or taxes.
4 Lipper Growth & Income Funds Index is an equally weighted index of funds that
combine a growth-of-earnings orientation and an income requirement for level
and/or rising dividends. The results of the underlying funds in the index
include the reinvestment of dividends and capital gain distributions, as well
as brokerage commissions paid by the funds for portfolio transactions, but do
not reflect sales charges or taxes.
5 MSCI World Index is a free float-adjusted, market capitalization weighted
index that is designed to measure equity market performance of developed
markets. The index consists of 23 developed country indexes, including the
United States. This index is unmanaged and its results include reinvested
dividends and/or distributions, but do not reflect sales charges, commissions,
expenses or taxes.
6 The distribution rate is based on actual dividends paid to Class A
shareholders over a 12-month period. Capital gain distributions, if any, are
added back to net asset value to determine the rate.
8
Fundamental Investors / Prospectus
<PAGE>
[begin pie chart]
INDUSTRY SECTOR DIVERSIFICATION AS OF DECEMBER 31, 2008 (PERCENT OF NET ASSETS)
Health care 11.87%
Industrials 12.24%
Information technology 17.61%
Energy 10.54%
Financials 7.58%
Other industries 28.19%
Bonds & notes 0.15%
Short-term securities & other assets less liabilities 11.82%
[end pie chart]
PERCENT INVESTED BY COUNTRY AS OF DECEMBER 31, 2008 PERCENT OF NET ASSETS
-------------------------------------------------------------------------------
United States 65.0%
-------------------------------------------------------------------------------
Euro zone* 9.1
-------------------------------------------------------------------------------
Canada 3.9
-------------------------------------------------------------------------------
Japan 1.7
-------------------------------------------------------------------------------
Switzerland 3.4
-------------------------------------------------------------------------------
United Kingdom 2.5
-------------------------------------------------------------------------------
Other countries 2.4
-------------------------------------------------------------------------------
Bonds, short-term securities & other assets less 12.0
liabilities
-------------------------------------------------------------------------------
* Countries using the euro as a common currency; those represented in the fund's
portfolio are Finland, France, Germany, Ireland, Italy and the Netherlands.
Because the fund is actively managed, its holdings will change over time.
For updated information on the fund's portfolio holdings, please visit us at
americanfunds.com.
9
Fundamental Investors / Prospectus
<PAGE>
Management and organization
INVESTMENT ADVISER
Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and other
funds, including the American Funds. Capital Research and Management Company is
a wholly owned subsidiary of The Capital Group Companies, Inc. and is located at
333 South Hope Street, Los Angeles, California 90071, and 6455 Irvine Center
Drive, Irvine, California 92618. Capital Research and Management Company manages
the investment portfolio and business affairs of the fund. The total management
fee paid by the fund, as a percentage of average net assets, for the previous
fiscal year appears in the Annual Fund Operating Expenses table under "Fees and
expenses of the fund." A discussion regarding the basis for the approval of the
fund's investment advisory and service agreement by the fund's board of
directors is contained in the fund's annual report to shareholders for the
fiscal year ended December 31, 2008.
Capital Research and Management Company manages equity assets through two
investment divisions, Capital World Investors and Capital Research Global
Investors, and manages fixed-income assets through its Fixed Income division.
Capital World Investors and Capital Research Global Investors make investment
decisions on an independent basis.
Rather than remain as investment divisions, Capital World Investors and Capital
Research Global Investors may be incorporated into wholly owned subsidiaries of
Capital Research and Management Company. In that event, Capital Research and
Management Company would continue to be the investment adviser, and day-to-day
investment management of equity assets would continue to be carried out through
one or both of these subsidiaries. Capital Research and Management Company and
the funds it advises have applied to the Securities and Exchange Commission for
an exemptive order that would give Capital Research and Management Company the
authority to use, upon approval of the funds' boards, its management
subsidiaries and affiliates to provide day-to-day investment management services
to the funds, including making changes to the management subsidiaries and
affiliates providing such services. Approval by the funds' shareholders would be
required before any authority granted under an exemptive order could be
exercised. There is no assurance that Capital Research and Management Company
will incorporate its investment divisions or seek a shareholder vote to exercise
any authority, if granted, under an exemptive order.
EXECUTION OF PORTFOLIO TRANSACTIONS
The investment adviser places orders with broker-dealers for the fund's
portfolio transactions. In selecting broker-dealers, the investment adviser
strives to obtain "best execution" (the most favorable total price reasonably
attainable under the circumstances) for the fund's
10
Fundamental Investors / Prospectus
<PAGE>
portfolio transactions, taking into account a variety of factors. Subject to
best execution, the investment adviser may consider investment research and/or
brokerage services provided to the adviser in placing orders for the fund's
portfolio transactions. The investment adviser may place orders for the fund's
portfolio transactions with broker-dealers who have sold shares of funds managed
by the investment adviser or its affiliated companies; however, it does not give
consideration to whether a broker-dealer has sold shares of the funds managed by
the investment adviser or its affiliated companies when placing any such orders
for the fund's portfolio transactions. A more detailed description of the
investment adviser's policies is included in the fund's statement of additional
information.
PORTFOLIO HOLDINGS
Portfolio holdings information for the fund is available on the American Funds
website at americanfunds.com. To reach this information, access the fund's
detailed information page on the website. A list of the fund's top 10 equity
holdings, updated as of each month-end, is generally posted to this page within
14 days after the end of the applicable month. A link to the fund's complete
list of publicly disclosed portfolio holdings, updated as of each calendar
quarter-end, is generally posted to this page within 45 days after the end of
the applicable quarter. Both lists remain available on the website until new
information for the next month or quarter is posted. Portfolio holdings
information for the fund is also contained in reports filed with the Securities
and Exchange Commission.
A description of the fund's policies and procedures regarding disclosure of
information about its portfolio holdings is available in the statement of
additional information.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach, the portfolio of
a fund is divided into segments managed by individual counselors who decide how
their respective segments will be invested. In addition, Capital Research and
Management Company's investment analysts may make investment decisions with
respect to a portion of a fund's portfolio. Investment decisions are subject to
a fund's objective(s), policies and restrictions and the oversight of the
appropriate investment-related committees of Capital Research and Management
Company and its investment divisions.
11
Fundamental Investors / Prospectus
<PAGE>
The primary individual portfolio counselors for Fundamental Investors are:
PRIMARY TITLE WITH PORTFOLIO
PORTFOLIO INVESTMENT ADVISER COUNSELOR
PORTFOLIO COUNSELOR/ COUNSELOR (OR AFFILIATE) ROLE IN
FUND TITLE EXPERIENCE AND INVESTMENT MANAGEMENT
(IF APPLICABLE) IN THIS FUND EXPERIENCE OF THE FUND
--------------------------------------------------------------------------------------------------
DINA N. PERRY 16 years Senior Vice President - Serves as an equity
President and Director (plus 1 year of Capital World Investors portfolio counselor
prior experience
as an Investment professional for
investment analyst 31 years in total;
for the fund) 17 years with Capital
Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------
MICHAEL T. KERR 10 years Senior Vice President - Serves as an equity
Senior Vice President (plus 5 years of Capital World Investors portfolio counselor
prior experience
as an Investment professional for
investment analyst 26 years in total;
for the fund) 24 years with Capital
Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------
RONALD B. MORROW 6 years Senior Vice President - Serves as an equity
Vice President (plus 5 years of Capital World Investors portfolio counselor
prior experience
as an Investment professional for
investment analyst 41 years in total;
for the fund) 12 years with Capital
Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------
JAMES E. DRASDO 25 years Senior Vice President - Serves as an equity
(plus 6 years of Capital World Investors portfolio counselor
prior experience
as an Investment professional for
investment analyst 37 years in total;
for the fund) 32 years with Capital
Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------
BRADY L. ENRIGHT 3 years Senior Vice President - Serves as an equity
Capital World Investors portfolio counselor
Investment professional for
17 years in total;
12 years with Capital
Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------
Information regarding the portfolio counselors' compensation, their ownership of
securities in the fund and other accounts they manage can be found in the
statement of additional information.
12
Fundamental Investors / Prospectus
<PAGE>
CERTAIN PRIVILEGES AND/OR SERVICES DESCRIBED ON THE FOLLOWING PAGES OF THIS
PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL INFORMATION MAY NOT BE AVAILABLE
TO YOU DEPENDING ON YOUR INVESTMENT DEALER OR RETIREMENT PLAN RECORDKEEPER.
PLEASE SEE YOUR FINANCIAL ADVISER, INVESTMENT DEALER OR PLAN RECORDKEEPER FOR
MORE INFORMATION.
13
Fundamental Investors / Prospectus
<PAGE>
Purchase, exchange and sale of shares
AMERICAN FUNDS SERVICE COMPANY, THE FUND'S TRANSFER AGENT, ON BEHALF OF THE FUND
AND AMERICAN FUNDS DISTRIBUTORS,/(R)/ THE FUND'S DISTRIBUTOR, IS REQUIRED BY
LAW TO OBTAIN CERTAIN PERSONAL INFORMATION FROM YOU OR ANY OTHER PERSON(S)
ACTING ON YOUR BEHALF IN ORDER TO VERIFY YOUR OR SUCH PERSON'S IDENTITY. IF YOU
DO NOT PROVIDE THE INFORMATION, THE TRANSFER AGENT MAY NOT BE ABLE TO OPEN YOUR
ACCOUNT. IF THE TRANSFER AGENT IS UNABLE TO VERIFY YOUR IDENTITY OR THAT OF ANY
OTHER PERSON(S) AUTHORIZED TO ACT ON YOUR BEHALF, OR BELIEVES IT HAS IDENTIFIED
POTENTIALLY CRIMINAL ACTIVITY, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE
THE RIGHT TO CLOSE YOUR ACCOUNT OR TAKE SUCH OTHER ACTION THEY DEEM REASONABLE
OR REQUIRED BY LAW.
PURCHASES AND EXCHANGES
Eligible retirement plans generally may open an account and purchase Class A or
R shares by contacting any investment dealer (who may impose transaction charges
in addition to those described in this prospectus) authorized to sell the fund's
shares. Some or all R share classes may not be available through certain
investment dealers. Additional shares may be purchased through a plan's
administrator or recordkeeper.
Class A shares are generally not available for retirement plans using the
PlanPremier or Recordkeeper Direct recordkeeping programs.
Class R shares generally are available only to 401(k) plans, 457 plans, 403(b)
plans, profit-sharing and money purchase pension plans, defined benefit plans
and nonqualified deferred compensation plans. Class R shares also are generally
available only to retirement plans where plan level or omnibus accounts are held
on the books of the fund. Class R-5 shares generally are available only to
retirement plans with $1 million or more in plan assets. In addition, Class R-5
shares are available for investment by American Funds Target Date Retirement
Series/(R)/ and other registered investment companies approved by the fund.
Class R shares generally are not available to retail nonretirement accounts,
traditional and Roth individual retirement accounts (IRAs), Coverdell Education
Savings Accounts, SEPs, SARSEPs, SIMPLE IRAs and 529 college savings plans.
Shares of the fund offered through this prospectus generally may be exchanged
into shares of the same class of other American Funds. Exchanges of Class A
shares from American Funds money market funds purchased without a sales charge
generally will be subject to the appropriate sales charge.
FREQUENT TRADING OF FUND SHARES
The fund and American Funds Distributors reserve the right to reject any
purchase order for any reason. The fund is not designed to serve as a vehicle
for frequent trading. Frequent trading of fund shares may lead to increased
costs to the fund and less efficient management of the fund's portfolio,
potentially resulting in dilution of the value of the shares held by long-term
shareholders. Accordingly, purchases, including those that are part of
14
Fundamental Investors / Prospectus
<PAGE>
exchange activity that the fund or American Funds Distributors has determined
could involve actual or potential harm to the fund, may be rejected.
The fund, through its transfer agent, American Funds Service Company, maintains
surveillance procedures that are designed to detect frequent trading in fund
shares. Under these procedures, various analytics are used to evaluate factors
that may be indicative of frequent trading. For example, transactions in fund
shares that exceed certain monetary thresholds may be scrutinized. American
Funds Service Company also may review transactions that occur close in time to
other transactions in the same account or in multiple accounts under common
ownership or influence. Trading activity that is identified through these
procedures or as a result of any other information available to the fund will be
evaluated to determine whether such activity might constitute frequent trading.
These procedures may be modified from time to time as appropriate to improve the
detection of frequent trading, to facilitate monitoring for frequent trading in
particular retirement plans or other accounts, and to comply with applicable
laws.
In addition to the fund's broad ability to restrict potentially harmful trading
as described above, the fund's board of directors has adopted a "purchase
blocking policy" under which any shareholder redeeming shares having a value of
$5,000 or more from the fund will be precluded from investing in the fund for 30
calendar days after the redemption transaction. This policy also applies to
redemptions and investments that are part of exchange transactions. Under the
fund's purchase blocking policy, certain purchases will not be prevented and
certain redemptions will not trigger a purchase block, such as: systematic
redemptions and purchases where the entity maintaining the shareholder account
is able to identify the transaction as a systematic redemption or purchase;
purchases and redemptions of shares having a value of less than $5,000;
transactions in Class 529 shares; purchases and redemptions resulting from
reallocations by American Funds Target Date Retirement Series; retirement plan
contributions, loans and distributions (including hardship withdrawals)
identified as such on the retirement plan recordkeeper's system; and purchase
transactions involving transfers of assets, rollovers, Roth IRA conversions and
IRA recharacterizations, where the entity maintaining the shareholder account is
able to identify the transaction as one of these types of transactions.
The fund reserves the right to waive the purchase blocking policy with respect
to specific shareholder accounts in those instances where American Funds Service
Company determines that its surveillance procedures are adequate to detect
frequent trading in fund shares.
American Funds Service Company will work with certain intermediaries (such as
investment dealers holding shareholder accounts in street name, retirement plan
recordkeepers, insurance company separate accounts and bank trust companies) to
apply their own procedures, provided that American Funds Service Company
believes the intermediary's procedures are reasonably designed to enforce the
frequent trading policies of
15
Fundamental Investors / Prospectus
<PAGE>
the fund. You should refer to disclosures provided by the intermediaries with
which you have an account to determine the specific trading restrictions that
apply to you.
If American Funds Service Company identifies any activity that may constitute
frequent trading, it reserves the right to contact the intermediary and request
that the intermediary either provide information regarding an account owner's
transactions or restrict the account owner's trading. If American Funds Service
Company is not satisfied that the intermediary has taken appropriate action,
American Funds Service Company may terminate the intermediary's ability to
transact in fund shares.
There is no guarantee that all instances of frequent trading in fund shares will
be prevented.
NOTWITHSTANDING THE FUND'S SURVEILLANCE PROCEDURES AND PURCHASE BLOCKING POLICY,
ALL TRANSACTIONS IN FUND SHARES REMAIN SUBJECT TO THE FUND'S AND AMERICAN FUNDS
DISTRIBUTORS' RIGHT TO RESTRICT POTENTIALLY ABUSIVE TRADING GENERALLY (INCLUDING
THE TYPES OF TRANSACTIONS DESCRIBED ABOVE THAT WILL NOT BE PREVENTED OR TRIGGER
A BLOCK UNDER THE PURCHASE BLOCKING POLICY). SEE THE STATEMENT OF ADDITIONAL
INFORMATION FOR MORE INFORMATION ABOUT HOW AMERICAN FUNDS SERVICE COMPANY MAY
ADDRESS OTHER POTENTIALLY ABUSIVE TRADING ACTIVITY IN THE AMERICAN FUNDS.
SALES
Please contact your plan administrator or recordkeeper in order to sell shares
from your retirement plan.
If you notify American Funds Service Company, you may reinvest proceeds from a
redemption, dividend payment or capital gain distribution without a sales charge
in the same fund or other American Funds provided that the reinvestment occurs
within 90 days after the date of the redemption or distribution and is made into
the same account from which you redeemed the shares or received the
distribution. If the account has been closed, you may reinvest without a sales
charge if the new receiving account has the same registration as the closed
account. Proceeds will be reinvested in the same share class from which the
original redemption or distribution was made. Redemption proceeds of Class A
shares representing direct purchases in American Funds money market funds that
are reinvested in non-money market American Funds will be subject to a sales
charge. Proceeds will be reinvested at the next calculated net asset value after
your request is received and accepted by American Funds Service Company. For
purposes of this "right of reinvestment policy," automatic transactions
(including, for example, automatic purchases, withdrawals and payroll
deductions) and ongoing retirement plan contributions are not eligible for
investment without a sales charge. See the statement of additional information
for further information. You may not reinvest proceeds in the American Funds as
described in this paragraph if such proceeds are subject to a purchase block as
described under "Frequent trading of fund shares" in this prospectus. This
paragraph does not apply to certain rollover investments as described under
"Rollovers from retirement plans to IRAs" in this prospectus.
16
Fundamental Investors / Prospectus
<PAGE>
VALUING SHARES
The net asset value of each share class of the fund is the value of a single
share. The fund calculates the net asset value each day the New York Stock
Exchange is open for trading as of approximately 4 p.m. New York time, the
normal close of regular trading. Assets are valued primarily on the basis of
market quotations. However, the fund has adopted procedures for making "fair
value" determinations if market quotations are not readily available or are not
considered reliable. For example, if events occur between the close of markets
outside the United States and the close of regular trading on the New York Stock
Exchange that, in the opinion of the investment adviser, materially affect the
value of any of the fund's securities that principally trade in those
international markets, those securities will be valued in accordance with fair
value procedures. Use of these procedures is intended to result in more
appropriate net asset values. In addition, such use will reduce, if not
eliminate, potential arbitrage opportunities otherwise available to short-term
investors.
Because the fund may hold securities that are primarily listed on foreign
exchanges that trade on weekends or days when the fund does not price its
shares, the value of securities held in the fund may change on days when you
will not be able to purchase or redeem fund shares.
Your shares will be purchased at the net asset value (plus any applicable sales
charge in the case of Class A shares) or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request.
MOVING BETWEEN SHARE CLASSES AND ACCOUNTS
Please see the statement of additional information for details and limitations
on moving investments in certain share classes to different share classes, and
on moving investments held in certain accounts to different accounts.
Sales charges
CLASS A SHARES
The initial sales charge you pay each time you buy Class A shares differs
depending upon the amount you invest and may be reduced or eliminated for larger
purchases as indicated below. The "offering price," the price you pay to buy
shares, includes any applicable sales charge, which will be deducted directly
from your investment. Shares acquired through reinvestment of dividends or
capital gain distributions are not subject to an initial sales charge.
17
Fundamental Investors / Prospectus
<PAGE>
SALES CHARGE AS A
PERCENTAGE OF:
DEALER
NET COMMISSION
OFFERING AMOUNT AS A PERCENTAGE
INVESTMENT PRICE INVESTED OF OFFERING PRICE
------------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 5.00%
------------------------------------------------------------------------------
$25,000 but less than $50,000 5.00 5.26 4.25
------------------------------------------------------------------------------
$50,000 but less than $100,000 4.50 4.71 3.75
------------------------------------------------------------------------------
$100,000 but less than $250,000 3.50 3.63 2.75
------------------------------------------------------------------------------
$250,000 but less than $500,000 2.50 2.56 2.00
------------------------------------------------------------------------------
$500,000 but less than $750,000 2.00 2.04 1.60
------------------------------------------------------------------------------
$750,000 but less than $1 million 1.50 1.52 1.20
------------------------------------------------------------------------------
$1 million or more and certain other none none see below
investments described below
------------------------------------------------------------------------------
The sales charge, expressed as a percentage of the offering price or the net
amount invested, may be higher or lower than the percentages described in the
table above due to rounding. This is because the dollar amount of the sales
charge is determined by subtracting the net asset value of the shares purchased
from the offering price, which is calculated to two decimal places using
standard rounding criteria. The impact of rounding will vary with the size of
the investment and the net asset value of the shares.
CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES
The following investments are not subject to any initial or contingent deferred
sales charge if American Funds Service Company is properly notified of the
nature of the investment:
. investments made by accounts that are part of certain qualified fee-based
programs and that purchased Class A shares before the discontinuation of your
investment dealer's load-waived Class A share program with the American Funds;
and
. certain rollover investments from retirement plans to IRAs (see "Rollovers
from retirement plans to IRAs" in this prospectus for more information).
The distributor may pay dealers up to 1% on investments made in Class A shares
with no initial sales charge. The fund may reimburse the distributor for these
payments through its plans of distribution (see "Plans of distribution" in this
prospectus).
Certain other investors may qualify to purchase shares without a sales charge,
such as employees of investment dealers and registered investment advisers
authorized to sell American Funds, and employees of The Capital Group Companies.
Please see the statement of additional information for more information.
18
Fundamental Investors / Prospectus
<PAGE>
EMPLOYER-SPONSORED RETIREMENT PLANS
Employer-sponsored retirement plans that are eligible to purchase Class R
shares may instead purchase Class A shares and pay the applicable Class A sales
charge, provided their recordkeepers can properly apply a sales charge on plan
investments. These plans are not eligible to make initial purchases of $1
million or more in Class A shares and thereby invest in Class A shares without
a sales charge, nor are they eligible to establish a statement of intention
that qualifies them to purchase Class A shares without a sales charge. More
information about statements of intention can be found under "Sales charge
reductions" in this prospectus. Plans investing in Class A shares with a sales
charge may purchase additional Class A shares in accordance with the sales
charge table in this prospectus.
Employer-sponsored retirement plans that invested in Class A shares without any
sales charge on or before March 31, 2004, and that continue to meet the
eligibility requirements in effect as of that date for purchasing Class A
shares at net asset value, may continue to purchase Class A shares without any
initial or contingent deferred sales charge.
A 403(b) plan may not invest in Class A, B or C shares on or after January 1,
2009, unless such plan was invested in Class A, B or C shares prior to that
date.
CLASS R SHARES
Class R shares are sold without any initial or contingent deferred sales charge.
The distributor will pay dealers annually an asset-based compensation of up to
1.00% for sales of Class R-1 shares, up to .75% for Class R-2 shares, up to .50%
for Class R-3 shares and up to .25% for Class R-4 shares. No dealer compensation
is paid on sales of Class R-5 shares. The fund may reimburse the distributor for
these payments through its plans of distribution (see "Plans of distribution" in
this prospectus).
Sales charge reductions
TO RECEIVE A REDUCTION IN YOUR CLASS A INITIAL SALES CHARGE, YOU MUST LET YOUR
FINANCIAL ADVISER OR AMERICAN FUNDS SERVICE COMPANY KNOW AT THE TIME YOU
PURCHASE SHARES THAT YOU QUALIFY FOR SUCH A REDUCTION. IF YOU DO NOT LET YOUR
ADVISER OR AMERICAN FUNDS SERVICE COMPANY KNOW THAT YOU ARE ELIGIBLE FOR A
REDUCTION, YOU MAY NOT RECEIVE A SALES CHARGE DISCOUNT TO WHICH YOU ARE
OTHERWISE ENTITLED. In order to determine your eligibility to receive a sales
charge discount, it may be necessary for you to provide your adviser or American
Funds Service Company with information and records (including account
statements) of all relevant accounts invested in the American Funds.
IN ADDITION TO THE INFORMATION IN THIS PROSPECTUS, YOU MAY OBTAIN MORE
INFORMATION ABOUT SHARE CLASSES, SALES CHARGES AND SALES CHARGE REDUCTIONS
THROUGH A LINK ON THE HOME
19
Fundamental Investors / Prospectus
<PAGE>
PAGE OF THE AMERICAN FUNDS WEBSITE AT AMERICANFUNDS.COM, FROM THE STATEMENT OF
ADDITIONAL INFORMATION OR FROM YOUR FINANCIAL ADVISER.
REDUCING YOUR CLASS A INITIAL SALES CHARGE
Consistent with the policies described in this prospectus, two or more
retirement plans of an employer or employer's affiliates may combine all of
their American Funds investments to reduce their Class A sales charge. Certain
investments in the American Funds Target Date Retirement Series may also be
combined for this purpose. Please see the American Funds Target Date Retirement
Series prospectus for further information. However, for this purpose,
investments representing direct purchases of American Funds money market funds
are excluded. Following are different ways that you may qualify for a reduced
Class A sales charge:
CONCURRENT PURCHASES
Simultaneous purchases of any class of shares of two or more American Funds
(excluding American Funds money market funds) may be combined to qualify for a
reduced Class A sales charge.
RIGHTS OF ACCUMULATION
You may take into account your accumulated holdings in all share classes of the
American Funds (excluding American Funds money market funds) to determine the
initial sales charge you pay on each purchase of Class A shares. Subject to
your investment dealer's or recordkeeper's capabilities, your accumulated
holdings will be calculated as the higher of (a) the current value of your
existing holdings or (b) the amount you invested (including reinvested
dividends and capital gains, but excluding capital appreciation) less any
withdrawals. Please see the statement of additional information for details.
You should retain any records necessary to substantiate the historical amounts
you have invested.
STATEMENT OF INTENTION
You may reduce your Class A sales charge by establishing a statement of
intention. A statement of intention allows you to combine all purchases of all
share classes of the American Funds (excluding American Funds money market
funds) you intend to make over a 13-month period to determine the applicable
sales charge; however, purchases made under a right of reinvestment,
appreciation of your holdings, and reinvested dividends and capital gains do
not count as purchases made during the statement period. The market value of
your existing holdings eligible to be aggregated as of the day immediately
before the start of the statement period may be credited toward satisfying the
statement. A portion of your account may be held in escrow to cover additional
Class A sales charges that may be due if your total purchases over the
statement period do not qualify you for the applicable sales charge reduction.
Employer-sponsored retirement
20
Fundamental Investors / Prospectus
<PAGE>
plans may be restricted from establishing statements of intention. See "Sales
charges" in this prospectus for more information.
RIGHT OF REINVESTMENT
Please see the "Sales" section of "Purchase, exchange and sale of shares" in
this prospectus for information on how to reinvest proceeds from a redemption,
dividend payment or capital gain distribution without a sales charge.
Rollovers from retirement plans to IRAs
Assets from retirement plans may be invested in Class A, B, C or F shares
through an IRA rollover, subject to the other provisions of this prospectus and
the prospectus for nonretirement plan shareholders. More information on Class B,
C and F shares can be found in the fund's prospectus for nonretirement plan
shareholders. Rollovers invested in Class A shares from retirement plans will be
subject to applicable sales charges. The following rollovers to Class A shares
will be made without a sales charge:
. rollovers to IRAs from 403(b) plans with Capital Bank and Trust Company as
custodian; and
. rollovers to IRAs that are attributable to American Funds investments, if they
meet the following requirements:
-- the assets being rolled over were invested in American Funds at the time of
distribution; and
-- the rolled over assets are contributed to an American Funds IRA with Capital
Bank and Trust Company as custodian.
IRA rollover assets that roll over without a sales charge as described above
will not be subject to a contingent deferred sales charge and investment dealers
will be compensated solely with an annual service fee that begins to accrue
immediately. IRA rollover assets invested in Class A shares that are not
attributable to American Funds investments, as well as future contributions to
the IRA, will be subject to sales charges and the terms and conditions generally
applicable to Class A share investments as described in this prospectus and the
statement of additional information.
Plans of distribution
The fund has plans of distribution or "12b-1 plans" for certain share classes,
under which it may finance activities primarily intended to sell shares,
provided the categories of expenses are approved in advance by the fund's board
of directors. The plans provide for payments, based on annualized percentages of
average daily net assets, of up to .25% for Class A shares, up to 1.00% for
Class R-1 and R-2 shares, up to .75% for Class R-3 shares and up to .50% for
Class R-4 shares. For all share classes indicated above, up to
21
Fundamental Investors / Prospectus
<PAGE>
.25% of these expenses may be used to pay service fees to qualified dealers for
providing certain shareholder services. The amount remaining for each share
class may be used for distribution expenses.
The 12b-1 fees paid by the fund, as a percentage of average net assets for the
previous fiscal year, are indicated in the Annual Fund Operating Expenses table
under "Fees and expenses of the fund" in this prospectus. Since these fees are
paid out of the fund's assets or income on an ongoing basis, over time they will
increase the cost and reduce the return of your investment.
Other compensation to dealers
American Funds Distributors, at its expense, currently provides additional
compensation to investment dealers. These payments may be made, at the
discretion of American Funds Distributors, to the top 100 dealers (or their
affiliates) that have sold shares of the American Funds. The level of payments
made to a qualifying firm in any given year will vary and in no case would
exceed the sum of (a) .10% of the previous year's American Funds sales by that
dealer and (b) .02% of American Funds assets attributable to that dealer. For
calendar year 2008, aggregate payments made by American Funds Distributors to
dealers were less than .02% of the average assets of the American Funds.
Aggregate payments may also change from year to year. A number of factors will
be considered in determining payments, including the qualifying dealer's sales,
assets and redemption rates, and the quality of the dealer's relationship with
American Funds Distributors. American Funds Distributors makes these payments to
help defray the costs incurred by qualifying dealers in connection with efforts
to educate financial advisers about the American Funds so that they can make
recommendations and provide services that are suitable and meet shareholder
needs. American Funds Distributors will, on an annual basis, determine the
advisability of continuing these payments. American Funds Distributors may also
pay expenses associated with meetings conducted by dealers outside the top 100
firms to facilitate educating financial advisers and shareholders about the
American Funds. If investment advisers, distributors or other affiliates of
mutual funds pay additional compensation or other incentives in differing
amounts, dealer firms and their advisers may have financial incentives for
recommending a particular mutual fund over other mutual funds. You should
consult with your financial adviser and review carefully any disclosure by your
financial adviser's firm as to compensation received.
22
Fundamental Investors / Prospectus
<PAGE>
Distributions and taxes
DIVIDENDS AND DISTRIBUTIONS
The fund intends to distribute dividends to shareholders, usually in February,
May, August and December.
Capital gains, if any, are usually distributed in December and February. When a
dividend or capital gain is distributed, the net asset value per share is
reduced by the amount of the payment.
All dividends and capital gain distributions paid to retirement plan
shareholders will be automatically reinvested.
TAXES ON DIVIDENDS AND DISTRIBUTIONS
Dividends and capital gains distributed by the fund to tax-deferred retirement
plan accounts are not taxable currently.
TAXES ON TRANSACTIONS
Exchanges within a tax-deferred retirement plan account will not result in a
capital gain or loss for federal or state income tax purposes. With limited
exceptions, distributions from a retirement plan account are taxable as ordinary
income.
PLEASE SEE YOUR TAX ADVISER FOR MORE INFORMATION.
23
Fundamental Investors / Prospectus
<PAGE>
Financial highlights
The Financial Highlights table is intended to help you understand the fund's
results for the past five fiscal years. Certain information reflects financial
results for a single share of a particular class. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the fund (assuming reinvestment of all dividends and capital gain
distributions). Where indicated, figures in the table reflect the impact, if
any, of certain reimbursements/waivers from Capital Research and Management
Company. For more information about these reimbursements/waivers, see the
footnotes to the Annual Fund Operating Expenses table under "Fees and expenses
of the fund" in this prospectus and the fund's annual report. The information in
the Financial Highlights table has been audited by Deloitte & Touche LLP, whose
report, along with the fund's financial statements, is included in the statement
of additional information, which is available upon request.
(LOSS) INCOME FROM INVESTMENT OPERATIONS/1/ DIVIDENDS AND DISTRIBUTIONS
Net (losses)
gains on
Net securities
asset (both Dividends Distributions Total
value, Net realized Total from (from net (from dividends
beginning investment and investment investment capital and
of year income/2/ unrealized) operations income) gains) distributions
----------------------------------------------------------------------------------------------------------------------------
CLASS A:
Year ended 12/31/2008 $42.45 $ .60 $(17.23) $(16.63) $ (.58) $ (.26) $ (.84)
Year ended 12/31/2007 40.05 1.03 4.39 5.42 (.95) (2.07) (3.02)
Year ended 12/31/2006 35.40 .62 6.16 6.78 (.56) (1.57) (2.13)
Year ended 12/31/2005 32.25 .58 3.16 3.74 (.59) -- (.59)
Year ended 12/31/2004 28.85 .61 3.35 3.96 (.56) -- (.56)
----------------------------------------------------------------------------------------------------------------------------
CLASS R-1:
Year ended 12/31/2008 42.31 .32 (17.18) (16.86) (.29) (.26) (.55)
Year ended 12/31/2007 39.93 .72 4.33 5.05 (.60) (2.07) (2.67)
Year ended 12/31/2006 35.31 .29 6.13 6.42 (.23) (1.57) (1.80)
Year ended 12/31/2005 32.18 .29 3.16 3.45 (.32) -- (.32)
Year ended 12/31/2004 28.79 .37 3.33 3.70 (.31) -- (.31)
----------------------------------------------------------------------------------------------------------------------------
CLASS R-2:
Year ended 12/31/2008 $42.30 $ .30 $(17.17) $(16.87) $ (.28) $ (.26) $ (.54)
Year ended 12/31/2007 39.92 .70 4.34 5.04 (.59) (2.07) (2.66)
Year ended 12/31/2006 35.29 .30 6.14 6.44 (.24) (1.57) (1.81)
Year ended 12/31/2005 32.17 .30 3.14 3.44 (.32) -- (.32)
Year ended 12/31/2004 28.77 .38 3.34 3.72 (.32) -- (.32)
----------------------------------------------------------------------------------------------------------------------------
CLASS R-3:
Year ended 12/31/2008 42.38 .48 (17.20) (16.72) (.46) (.26) (.72)
Year ended 12/31/2007 39.98 .92 4.34 5.26 (.79) (2.07) (2.86)
Year ended 12/31/2006 35.35 .47 6.14 6.61 (.41) (1.57) (1.98)
Year ended 12/31/2005 32.21 .45 3.16 3.61 (.47) -- (.47)
Year ended 12/31/2004 28.82 .50 3.33 3.83 (.44) -- (.44)
----------------------------------------------------------------------------------------------------------------------------
CLASS R-4:
Year ended 12/31/2008 42.39 .58 (17.19) (16.61) (.57) (.26) (.83)
Year ended 12/31/2007 39.99 1.05 4.34 5.39 (.92) (2.07) (2.99)
Year ended 12/31/2006 35.36 .59 6.14 6.73 (.53) (1.57) (2.10)
Year ended 12/31/2005 32.22 .55 3.16 3.71 (.57) -- (.57)
Year ended 12/31/2004 28.83 .60 3.33 3.93 (.54) -- (.54)
----------------------------------------------------------------------------------------------------------------------------
(The Financial Highlights table continues on the following page.)
----------------------------------------------------------------------------------------------------------------------------
CLASS R-5:
Year ended 12/31/2008 $42.46 $ .69 $(17.23) $(16.54) $ (.67) $ (.26) $ (.93)
Year ended 12/31/2007 40.06 1.18 4.34 5.52 (1.05) (2.07) (3.12)
Year ended 12/31/2006 35.41 .71 6.16 6.87 (.65) (1.57) (2.22)
Year ended 12/31/2005 32.26 .65 3.17 3.82 (.67) -- (.67)
Year ended 12/31/2004 28.86 .68 3.35 4.03 (.63) -- (.63)
Ratio of Ratio of
expenses expenses
to to
average average Ratio
Net net net of net
assets, assets assets income
Net asset end of before after to
value, year reim- reim- average
end of Total (in bursements/ bursements/ net
year return/3,4/ millions) waivers waivers/4/ assets/2,4/
--------------------------------------------------------------------------------------------------------
CLASS A:
Year ended 12/31/2008 $24.98 (39.70)% $24,443 .63% .61% 1.70%
Year ended 12/31/2007 42.45 13.55 38,877 .60 .57 2.40
Year ended 12/31/2006 40.05 19.24 32,187 .61 .58 1.60
Year ended 12/31/2005 35.40 11.68 24,390 .62 .60 1.75
Year ended 12/31/2004 32.25 13.91 21,543 .63 .63 2.05
--------------------------------------------------------------------------------------------------------
CLASS R-1:
Year ended 12/31/2008 24.90 (40.16) 61 1.43 1.41 .91
Year ended 12/31/2007 42.31 12.62 57 1.44 1.42 1.67
Year ended 12/31/2006 39.93 18.19 23 1.47 1.43 .74
Year ended 12/31/2005 35.31 10.74 11 1.50 1.46 .88
Year ended 12/31/2004 32.18 12.92 6 1.53 1.49 1.26
--------------------------------------------------------------------------------------------------------
CLASS R-2:
Year ended 12/31/2008 $24.89 (40.19)% $ 366 1.49% 1.47% .85%
Year ended 12/31/2007 42.30 12.61 471 1.46 1.40 1.62
Year ended 12/31/2006 39.92 18.26 291 1.54 1.41 .77
Year ended 12/31/2005 35.29 10.73 155 1.64 1.43 .91
Year ended 12/31/2004 32.17 13.02 93 1.76 1.45 1.29
--------------------------------------------------------------------------------------------------------
CLASS R-3:
Year ended 12/31/2008 24.94 (39.89) 1,058 .98 .95 1.37
Year ended 12/31/2007 42.38 13.17 1,157 .97 .94 2.12
Year ended 12/31/2006 39.98 18.75 525 .99 .96 1.21
Year ended 12/31/2005 35.35 11.26 220 1.01 .98 1.35
Year ended 12/31/2004 32.21 13.41 125 1.05 1.04 1.69
--------------------------------------------------------------------------------------------------------
CLASS R-4:
Year ended 12/31/2008 24.95 (39.70) 942 .67 .65 1.68
Year ended 12/31/2007 42.39 13.51 879 .66 .64 2.42
Year ended 12/31/2006 39.99 19.12 438 .67 .65 1.52
Year ended 12/31/2005 35.36 11.61 205 .69 .66 1.66
Year ended 12/31/2004 32.22 13.85 80 .69 .69 2.04
--------------------------------------------------------------------------------------------------------
(The Financial Highlights table continues on the following page.)
--------------------------------------------------------------------------------------------------------
CLASS R-5:
Year ended 12/31/2008 $24.99 (39.53)% $ 1,077 .37% .35% 1.98%
Year ended 12/31/2007 42.46 13.81 1,014 .37 .34 2.73
Year ended 12/31/2006 40.06 19.50 481 .38 .35 1.83
Year ended 12/31/2005 35.41 11.94 265 .39 .36 1.96
Year ended 12/31/2004 32.26 14.19 141 .39 .39 2.31
24
Fundamental Investors / Prospectus
<PAGE>
YEAR ENDED DECEMBER 31
2008 2007 2006 2005 2004
------------------------------------------------------------------------------------
PORTFOLIO TURNOVER
RATE FOR ALL CLASSES 29% 27% 21% 24% 30%
OF SHARES
25
Fundamental Investors / Prospectus
<PAGE>
1 Based on average shares outstanding.
2 For the year ended December 31, 2007, this column reflects the impact of a
corporate action event that resulted in a one-time increase to net investment
income. If the corporate action had not occurred, the Class A net investment
income per share and ratio of net income to average net assets would have been
lower by $0.39 and .90%, respectively. The impact to the other share classes
would have been approximately the same.
3 Total returns exclude any applicable sales charges.
4 This column reflects the impact, if any, of certain reimbursements/waivers
from Capital Research and Management Company. During the years shown, Capital
Research and Management Company reduced fees for investment advisory services.
In addition, during some of the years shown, Capital Research and Management
Company paid a portion of the fund's transfer agent fees for certain retirement
plan share classes.
26
Fundamental Investors / Prospectus
<PAGE>
NOTES
27
Fundamental Investors / Prospectus
<PAGE>
[Logo - American Funds /(R)/] The right choice for the long term/(R)/
FOR SHAREHOLDER SERVICES American Funds Service Company
800/421-0180
FOR RETIREMENT PLAN SERVICES Call your employer or plan
administrator
FOR ADVISER MARKETING American Funds Distributors
800/421-9900
FOR 529 PLANS American Funds Service Company
800 /421-0180, ext. 529
FOR 24-HOUR INFORMATION American FundsLine
800/325-3590
americanfunds.com
Telephone calls you have with the American Funds organization may be
monitored or recorded for quality assurance, verification and/or
recordkeeping purposes. By speaking with us on the telephone, you are
giving your consent to such monitoring and recording.
-----------------------------------------------------------------------------------
MULTIPLE TRANSLATIONS This prospectus may be translated into other languages.
If there is any inconsistency or ambiguity in the meaning of any translated word
or phrase, the English text will prevail.
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS The shareholder reports contain
additional information about the fund, including financial statements,
investment results, portfolio holdings, a discussion of market conditions and
the fund's investment strategies and the independent registered public
accounting firm's report (in the annual report).
STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The current SAI,
as amended from time to time, contains more detailed information about the fund,
including the fund's financial statements, and is incorporated by reference into
this prospectus. This means that the current SAI, for legal purposes, is part of
this prospectus. The codes of ethics describe the personal investing policies
adopted by the fund, the fund's investment adviser and its affiliated companies.
The codes of ethics and current SAI are on file with the Securities and Exchange
Commission (SEC). These and other related materials about the fund are available
for review or to be copied at the SEC's Public Reference Room in Washington, DC
(202/551-8090) or on the EDGAR database on the SEC's website at sec.gov or,
after payment of a duplicating fee, via e-mail request to publicinfo@sec.gov or
by writing to the SEC's Public Reference Section, 100 F Street, NE, Washington,
DC 20549-0102. The codes of ethics, current SAI and shareholder reports are also
available, free of charge, on americanfunds.com.
E-DELIVERY AND HOUSEHOLD MAILINGS Each year you are automatically sent an
updated prospectus and annual and semi-annual reports for the fund. You may also
occasionally receive proxy statements for the fund. In order to reduce the
volume of mail you receive, when possible, only one copy of these documents will
be sent to shareholders who are part of the same family and share the same
household address. You may elect to receive these documents electronically in
lieu of paper form by enrolling in e-delivery on our website, americanfunds.com.
If you would like to opt out of household-based mailings or receive a
complimentary copy of the current SAI, codes of ethics or annual/semi-annual
report to shareholders, please call American Funds Service Company at
800/421-0180 or write to the secretary of the fund at P.O. Box 7650, San
Francisco, California 94120.
SECURITIES INVESTOR PROTECTION CORPORATION (SIPC) Shareholders may obtain
information about SIPC on its website at sipc.org or by calling 202/371-8300.
Investment Company File No. 811-00032
RPGEPR-910-0309P Litho in USA CGD/B/8032
----------------------------------------------------------------------------------------------------------------------------------------
THE CAPITAL GROUP COMPANIES
American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust
THE FUND PROVIDES SPANISH TRANSLATION IN CONNECTION WITH THE
PUBLIC OFFERING AND SALE OF ITS SHARES. THE FOLLOWING IS A FAIR
AND ACCURATE ENGLISH TRANSLATION OF A SPANISH LANGUAGE PROSPECTUS
FOR THE FUND.
/s/ PATRICK F. QUAN
PATRICK F. QUAN
SECRETARY
<PAGE>
[Logo - American Funds/(R)/] The right choice for the long term/(R)/
Fundamental Investors/SM/
RETIREMENT PLAN
PROSPECTUS
March 1, 2009
TABLE OF CONTENTS
1 Risk/Return summary
4 Fees and expenses of the fund
6 Investment objective, strategies and risks
10 Management and organization
14 Purchase, exchange and sale of shares
17 Sales charges
19 Sales charge reductions
21 Rollovers from retirement plans to IRAs
21 Plans of distribution
22 Other compensation to dealers
23 Distributions and taxes
24 Financial highlights
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF
THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
[This page intentionally left blank for this filing]
<PAGE>
Risk/Return summary
The fund seeks to make your investment grow and provide you with income over
time by investing primarily in common stocks of large, established companies
that offer growth potential at reasonable prices. The fund may also invest
significantly in securities of issuers domiciled outside the United States.
The fund is designed for investors seeking both capital appreciation and income.
Your investment in the fund is subject to risks, including the possibility that
the fund's income and the value of its portfolio holdings may fluctuate in
response to events specific to the companies or markets in which the fund
invests, as well as economic, political or social events in the United States or
abroad.
Although all securities in the fund's portfolio may be adversely affected by
currency fluctuations or global economic, political or social instability,
securities issued by entities based outside the United States may be affected to
a greater extent.
Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.
1
Fundamental Investors / Prospectus
<PAGE>
HISTORICAL INVESTMENT RESULTS
The bar chart below shows how the fund's investment results have varied from
year to year, and the Investment Results table on page 3 shows how the fund's
average annual total returns for various periods compare with different broad
measures of market performance. This information provides some indication of the
risks of investing in the fund. All fund results reflect the reinvestment of
dividends and capital gain distributions, if any. Unless otherwise noted, fund
results reflect any fee waivers and/or expense reimbursements in effect during
the period presented. Past results are not predictive of future results.
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if a sales charge were included,
results would be lower.)
[begin bar chart]
1999 24.58%
2000 4.27
2001 -9.55
2002 -17.34
2003 31.96
2004 13.91
2005 11.68
2006 19.24
2007 13.55
2008 -39.70
[end bar chart]
Highest/Lowest quarterly results during this time period were:
HIGHEST 16.28% (quarter ended December 31, 2003)
LOWEST -23.34% (quarter ended December 31, 2008)
2
Fundamental Investors / Prospectus
<PAGE>
Unlike the bar chart on the previous page, the Investment Results table below
reflects, as required by Securities and Exchange Commission rules, the fund's
investment results with the following maximum initial sales charge imposed:
. Class A share results reflect the maximum initial sales charge of 5.75%. This
charge is reduced for purchases of $25,000 or more and eliminated for
purchases of $1 million or more.
. Class R shares are sold without any initial sales charge.
Results would be higher if calculated without a sales charge.
Unlike the Investment Results table below, the Additional Investment Results
table on page 8 reflects the fund's results calculated without a sales charge.
INVESTMENT RESULTS (WITH A MAXIMUM SALES CHARGE)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2008:
1 YEAR 5 YEARS 10 YEARS LIFETIME/1/
-------------------------------------------------------------------------
CLASS A -- FROM 8/1/78 -43.16% -0.42% 2.30% 11.63%
1 YEAR 5 YEARS LIFETIME/1/
-----------------------------------------------------------------
CLASS R-1 -- FIRST SOLD 6/19/02 -40.16% -0.08% 1.78%
CLASS R-2 -- FIRST SOLD 5/21/02 -40.19 -0.07 0.99
CLASS R-3 -- FIRST SOLD 6/4/02 -39.89 0.38 1.86
CLASS R-4 -- FIRST SOLD 7/25/02 -39.70 0.71 5.54
CLASS R-5 -- FIRST SOLD 5/15/02 -39.53 1.00 1.94
1 YEAR 5 YEARS 10 YEARS LIFETIME/2/
-------------------------------------------------------------------------------
INDEXES
S&P 500/3/ -36.99% -2.19% -1.38% 10.74%
Lipper Growth & Income -37.54 -2.12 -0.24 10.04
Funds Index/4/
MSCI World Index/5/ -40.33 0.00 -0.19 9.78
Class A annualized 30-day yield at December 31, 2008: 2.04%/6/
(For current yield information, please call American FundsLine/(R)/ at
800/325-3590.)
1 Lifetime results for Class A shares are measured from August 1, 1978, when
Capital Research and Management Company became the fund's investment adviser.
Lifetime results for other share classes are measured from the date the share
class was first sold.
2 Lifetime results for the index(es) shown are measured from the date Capital
Research and Management Company became the fund's investment adviser. The funds
or securities that compose each index may vary over time.
3 Standard & Poor's 500 Composite Index is a market capitalization-weighted
index based on the average weighted performance of 500 widely held common
stocks. This index is unmanaged and its results include reinvested dividends
and/ or distributions, but do not reflect sales charges, commissions, expenses
or taxes.
4 Lipper Growth & Income Funds Index is an equally weighted index of funds that
combine a growth-of-earnings orientation and an income requirement for level
and/or rising dividends. The results of the underlying funds in the index
include the reinvestment of dividends and capital gain distributions, as well
as brokerage commissions paid by the funds for portfolio transactions, but do
not reflect sales charges or taxes.
5 MSCI World Index is a free float-adjusted, market capitalization weighted
index that is designed to measure equity market performance of developed
markets. The index consists of 23 developed country indexes, including the
United States. This index is unmanaged and its results include reinvested
dividends and/or distributions, but do not reflect sales charges, commissions,
expenses or taxes.
6 Reflects a fee waiver (2.02% without the waiver) as described in the Annual
Fund Operating Expenses table under "Fees and expenses of the fund."
3
Fundamental Investors / Prospectus
<PAGE>
Fees and expenses of the fund
These tables describe the fees and expenses that you may pay if you buy and hold
shares of the fund.
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A ALL R SHARE CLASSES
------------------------------------------------------------------------------
Maximum initial sales charge on purchases 5.75%/*/ none
(as a percentage of offering price)
------------------------------------------------------------------------------
Maximum sales charge on reinvested dividends none none
------------------------------------------------------------------------------
Maximum contingent deferred sales charge none none
------------------------------------------------------------------------------
Redemption or exchange fees none none
* The initial sales charge is reduced for purchases of $25,000 or more and
eliminated for purchases of $1 million or more.
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
CLASS CLASS CLASS CLASS CLASS
CLASS A R-1 R-2 R-3 R-4 R-5
-------------------------------------------------------------------------------
Management fees/1/ 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
-------------------------------------------------------------------------------
Distribution and/or service 0.24 1.00 0.75 0.50 0.25 none
(12b-1) fees/2/
-------------------------------------------------------------------------------
Other expenses/1/ 0.14 0.18 0.49 0.23 0.17 0.12
-------------------------------------------------------------------------------
Total annual fund operating 0.63 1.43 1.49 0.98 0.67 0.37
expenses/1/
-------------------------------------------------------------------------------
1 The fund's investment adviser waived a portion of its management fees from
September 1, 2004, through December 31, 2008. In addition, the investment
adviser paid a portion of the fund's transfer agent fees for certain R share
classes. Management fees, other expenses and total annual fund operating
expenses in the table do not reflect any waiver or reimbursement. Information
regarding the effect of any waiver/reimbursement on total annual fund operating
expenses can be found in the Financial Highlights table in this prospectus and
in the fund's annual report.
2 Class A, R-1, R-2, R-3 and R-4 12b-1 fees may not exceed .25%, 1.00%, 1.00%,
.75% and .50%, respectively, of the class's average net assets annually.
4
Fundamental Investors / Prospectus
<PAGE>
OTHER EXPENSES
The "Other expenses" items in the table above include custodial, legal, transfer
agent and subtransfer agent/recordkeeping payments, as well as various other
expenses. Subtransfer agent/recordkeeping payments may be made to the fund's
investment adviser, affiliates of the adviser and unaffiliated third parties for
providing recordkeeping and other administrative services to retirement plans
invested in the fund in lieu of the transfer agent providing such services. The
amount paid for subtransfer agent/recordkeeping services will vary depending on
the share class selected and the entity receiving the payments. The table below
shows the maximum payments to entities providing services to retirement plans.
PAYMENTS TO AFFILIATED ENTITIES PAYMENTS TO UNAFFILIATED
ENTITIES
-------------------------------------------------------------------------------
Class A .05% of assets or .05% of assets or
$12 per participant position/1/ $12 per participant position/1/
-------------------------------------------------------------------------------
Class R-1 .10% of assets .10% of assets
-------------------------------------------------------------------------------
Class R-2 .15% of assets plus $27 per .25% of assets
participant position/2/ or .35%
of assets/3/
-------------------------------------------------------------------------------
Class R-3 .10% of assets plus $12 per .15% of assets
participant position/2/ or .19%
of assets/3/
Class R-4 .10% of assets .10% of assets
-------------------------------------------------------------------------------
Class R-5 .05% of assets .05% of assets
-------------------------------------------------------------------------------
1 Payment amount depends on the date upon which services commenced.
2 Payment with respect to Recordkeeper Direct/(R)/ program.
3 Payment with respect to PlanPremier/(R)/ program.
EXAMPLES
The examples below are intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The examples do not reflect the impact of any fee waivers
or expense reimbursements.
Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------
Class A* $636 $765 $906 $1,316
--------------------------------------------------------------------
Class R-1 146 452 782 1,713
--------------------------------------------------------------------
Class R-2 152 471 813 1,779
--------------------------------------------------------------------
Class R-3 100 312 542 1,201
--------------------------------------------------------------------
Class R-4 68 214 373 835
--------------------------------------------------------------------
Class R-5 38 119 208 468
--------------------------------------------------------------------
* Reflects the maximum initial sales charge.
5
Fundamental Investors / Prospectus
<PAGE>
Investment objective, strategies and risks
The fund's investment objective is to achieve long-term growth of capital and
income. The fund invests primarily in common stocks or securities convertible
into common stocks and may invest significantly in securities of issuers
domiciled outside the United States and Canada and not included in the Standard
& Poor's 500 Composite Index.
The prices of, and the income generated by, securities held by the fund may
decline in response to certain events, including those directly involving the
companies whose securities are owned by the fund; conditions affecting the
general economy; overall market changes; local, regional or global political,
social or economic instability; and currency, interest rate and commodity price
fluctuations.
Investments in securities issued by entities based outside the United States may
be subject to the risks described above to a greater extent and may also be
affected by currency fluctuations and controls; different accounting, auditing,
financial reporting, and legal standards and practices in some countries;
expropriation; changes in tax policy; greater market volatility; differing
securities market structures; higher transaction costs; and various
administrative difficulties, such as delays in clearing and settling portfolio
transactions or in receiving payment of dividends. These risks may be heightened
in connection with investments in developing countries. Investments in
securities issued by entities domiciled in the United States may also be subject
to many of these risks.
The fund may also hold cash or money market instruments. The percentage of the
fund invested in such holdings varies and depends on various factors, including
market conditions and purchases and redemptions of fund shares. A larger
percentage of such holdings could moderate the fund's investment results in a
period of rising market prices.
A larger percentage of cash or money market instruments could reduce the
magnitude of the fund's loss in a period of falling market prices and provide
liquidity to make additional investments or to meet redemptions.
The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively valued
companies that, in its opinion, represent above-average, long-term investment
opportunities. The investment adviser believes that an important way to
accomplish this is through fundamental analysis, which may include meeting with
company executives and employees, suppliers, customers and competitors.
Securities may be sold when the investment adviser believes that they no longer
represent relatively attractive investment opportunities.
6
Fundamental Investors / Prospectus
<PAGE>
OTHER IMPORTANT INVESTMENT PRACTICES
In addition to the principal investment strategies described above, the fund has
other investment practices that are described in this prospectus and in the
statement of additional information.
The fund may invest to a limited extent in lower quality debt securities rated
Ba1 and BB+ or below or unrated but determined by the investment adviser to be
of equivalent quality. The prices of debt securities fluctuate depending on such
factors as changing interest rates, effective maturities and credit ratings. For
example, their prices generally decline when interest rates rise and vice versa.
Lower quality or longer maturity debt securities generally have higher rates of
interest and may be subject to greater price fluctuations than higher quality or
shorter maturity debt securities.
ADDITIONAL INVESTMENT RESULTS
Unlike the Investment Results table on page 3, the table on page 8 reflects the
fund's results calculated without a sales charge.
7
Fundamental Investors / Prospectus
<PAGE>
ADDITIONAL INVESTMENT RESULTS (WITHOUT A SALES CHARGE)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2008:
1 YEAR 5 YEARS 10 YEARS LIFETIME/1/
-------------------------------------------------------------------------
CLASS A -- FROM 8/1/78 -39.70% 0.76% 2.90% 11.85%
1 YEAR 5 YEARS LIFETIME/1/
-----------------------------------------------------------------
CLASS R-1 -- FIRST SOLD 6/19/02 -40.16% -0.08% 1.78%
CLASS R-2 -- FIRST SOLD 5/21/02 -40.19 -0.07 0.99
CLASS R-3 -- FIRST SOLD 6/4/02 -39.89 0.38 1.86
CLASS R-4 -- FIRST SOLD 7/25/02 -39.70 0.71 5.54
CLASS R-5 -- FIRST SOLD 5/15/02 -39.53 1.00 1.94
1 YEAR 5 YEARS 10 YEARS LIFETIME/2/
-------------------------------------------------------------------------------
INDEXES
S&P 500/3/ -36.99% -2.19% -1.38% 10.74%
Lipper Growth & Income -37.54 -2.12 -0.24 10.04
Funds Index/4/
MSCI World Index/5/ -40.33 0.00 -0.19 9.78
Class A distribution rate at December 31, 2008: 2.30%/6/
(For current distribution rate information, please call American FundsLine
at 800/325-3590.)
1 Lifetime results for Class A shares are measured from August 1, 1978, when
Capital Research and Management Company became the fund's investment adviser.
Lifetime results for other share classes are measured from the date the share
class was first sold.
2 Lifetime results for the index(es) shown are measured from the date Capital
Research and Management Company became the fund's investment adviser. The funds
or securities that compose each index may vary over time.
3 Standard & Poor's 500 Composite Index is a market capitalization-weighted
index based on the average weighted performance of 500 widely held common
stocks. This index is unmanaged and its results include reinvested dividends
and/ or distributions, but do not reflect sales charges, commissions, expenses
or taxes.
4 Lipper Growth & Income Funds Index is an equally weighted index of funds that
combine a growth-of-earnings orientation and an income requirement for level
and/or rising dividends. The results of the underlying funds in the index
include the reinvestment of dividends and capital gain distributions, as well
as brokerage commissions paid by the funds for portfolio transactions, but do
not reflect sales charges or taxes.
5 MSCI World Index is a free float-adjusted, market capitalization weighted
index that is designed to measure equity market performance of developed
markets. The index consists of 23 developed country indexes, including the
United States. This index is unmanaged and its results include reinvested
dividends and/or distributions, but do not reflect sales charges, commissions,
expenses or taxes.
6 The distribution rate is based on actual dividends paid to Class A
shareholders over a 12-month period. Capital gain distributions, if any, are
added back to net asset value to determine the rate.
8
Fundamental Investors / Prospectus
<PAGE>
[begin pie chart]
INDUSTRY SECTOR DIVERSIFICATION AS OF DECEMBER 31, 2008 (PERCENT OF NET ASSETS)
Health care 11.87%
Industrials 12.24%
Information technology 17.61%
Energy 10.54%
Financials 7.58%
Other industries 28.19%
Bonds & notes 0.15%
Short-term securities & other assets less liabilities 11.82%
[end pie chart]
PERCENT INVESTED BY COUNTRY AS OF DECEMBER 31, 2008 PERCENT OF NET ASSETS
-------------------------------------------------------------------------------
United States 65.0%
-------------------------------------------------------------------------------
Euro zone* 9.1
-------------------------------------------------------------------------------
Canada 3.9
-------------------------------------------------------------------------------
Japan 1.7
-------------------------------------------------------------------------------
Switzerland 3.4
-------------------------------------------------------------------------------
United Kingdom 2.5
-------------------------------------------------------------------------------
Other countries 2.4
-------------------------------------------------------------------------------
Bonds, short-term securities & other assets less 12.0
liabilities
-------------------------------------------------------------------------------
* Countries using the euro as a common currency; those represented in the fund's
portfolio are Finland, France, Germany, Ireland, Italy and the Netherlands.
Because the fund is actively managed, its holdings will change over time.
For updated information on the fund's portfolio holdings, please visit us at
americanfunds.com.
9
Fundamental Investors / Prospectus
<PAGE>
Management and organization
INVESTMENT ADVISER
Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and other
funds, including the American Funds. Capital Research and Management Company is
a wholly owned subsidiary of The Capital Group Companies, Inc. and is located at
333 South Hope Street, Los Angeles, California 90071, and 6455 Irvine Center
Drive, Irvine, California 92618. Capital Research and Management Company manages
the investment portfolio and business affairs of the fund. The total management
fee paid by the fund, as a percentage of average net assets, for the previous
fiscal year appears in the Annual Fund Operating Expenses table under "Fees and
expenses of the fund." A discussion regarding the basis for the approval of the
fund's investment advisory and service agreement by the fund's board of
directors is contained in the fund's annual report to shareholders for the
fiscal year ended December 31, 2008.
Capital Research and Management Company manages equity assets through two
investment divisions, Capital World Investors and Capital Research Global
Investors, and manages fixed-income assets through its Fixed Income division.
Capital World Investors and Capital Research Global Investors make investment
decisions on an independent basis.
Rather than remain as investment divisions, Capital World Investors and Capital
Research Global Investors may be incorporated into wholly owned subsidiaries of
Capital Research and Management Company. In that event, Capital Research and
Management Company would continue to be the investment adviser, and day-to-day
investment management of equity assets would continue to be carried out through
one or both of these subsidiaries. Capital Research and Management Company and
the funds it advises have applied to the Securities and Exchange Commission for
an exemptive order that would give Capital Research and Management Company the
authority to use, upon approval of the funds' boards, its management
subsidiaries and affiliates to provide day-to-day investment management services
to the funds, including making changes to the management subsidiaries and
affiliates providing such services. Approval by the funds' shareholders would be
required before any authority granted under an exemptive order could be
exercised. There is no assurance that Capital Research and Management Company
will incorporate its investment divisions or seek a shareholder vote to exercise
any authority, if granted, under an exemptive order.
EXECUTION OF PORTFOLIO TRANSACTIONS
The investment adviser places orders with broker-dealers for the fund's
portfolio transactions. In selecting broker-dealers, the investment adviser
strives to obtain "best execution" (the most favorable total price reasonably
attainable under the circumstances) for the fund's
10
Fundamental Investors / Prospectus
<PAGE>
portfolio transactions, taking into account a variety of factors. Subject to
best execution, the investment adviser may consider investment research and/or
brokerage services provided to the adviser in placing orders for the fund's
portfolio transactions. The investment adviser may place orders for the fund's
portfolio transactions with broker-dealers who have sold shares of funds managed
by the investment adviser or its affiliated companies; however, it does not give
consideration to whether a broker-dealer has sold shares of the funds managed by
the investment adviser or its affiliated companies when placing any such orders
for the fund's portfolio transactions. A more detailed description of the
investment adviser's policies is included in the fund's statement of additional
information.
PORTFOLIO HOLDINGS
Portfolio holdings information for the fund is available on the American Funds
website at americanfunds.com. To reach this information, access the fund's
detailed information page on the website. A list of the fund's top 10 equity
holdings, updated as of each month-end, is generally posted to this page within
14 days after the end of the applicable month. A link to the fund's complete
list of publicly disclosed portfolio holdings, updated as of each calendar
quarter-end, is generally posted to this page within 45 days after the end of
the applicable quarter. Both lists remain available on the website until new
information for the next month or quarter is posted. Portfolio holdings
information for the fund is also contained in reports filed with the Securities
and Exchange Commission.
A description of the fund's policies and procedures regarding disclosure of
information about its portfolio holdings is available in the statement of
additional information.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach, the portfolio of
a fund is divided into segments managed by individual counselors who decide how
their respective segments will be invested. In addition, Capital Research and
Management Company's investment analysts may make investment decisions with
respect to a portion of a fund's portfolio. Investment decisions are subject to
a fund's objective(s), policies and restrictions and the oversight of the
appropriate investment-related committees of Capital Research and Management
Company and its investment divisions.
11
Fundamental Investors / Prospectus
<PAGE>
The primary individual portfolio counselors for Fundamental Investors are:
PRIMARY TITLE WITH PORTFOLIO
PORTFOLIO INVESTMENT ADVISER COUNSELOR
PORTFOLIO COUNSELOR/ COUNSELOR (OR AFFILIATE) ROLE IN
FUND TITLE EXPERIENCE AND INVESTMENT MANAGEMENT
(IF APPLICABLE) IN THIS FUND EXPERIENCE OF THE FUND
--------------------------------------------------------------------------------------------------
DINA N. PERRY 16 years Senior Vice President - Serves as an equity
President and Director (plus 1 year of Capital World Investors portfolio counselor
prior experience
as an Investment professional for
investment analyst 31 years in total;
for the fund) 17 years with Capital
Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------
MICHAEL T. KERR 10 years Senior Vice President - Serves as an equity
Senior Vice President (plus 5 years of Capital World Investors portfolio counselor
prior experience
as an Investment professional for
investment analyst 26 years in total;
for the fund) 24 years with Capital
Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------
RONALD B. MORROW 6 years Senior Vice President - Serves as an equity
Vice President (plus 5 years of Capital World Investors portfolio counselor
prior experience
as an Investment professional for
investment analyst 41 years in total;
for the fund) 12 years with Capital
Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------
JAMES E. DRASDO 25 years Senior Vice President - Serves as an equity
(plus 6 years of Capital World Investors portfolio counselor
prior experience
as an Investment professional for
investment analyst 37 years in total;
for the fund) 32 years with Capital
Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------
BRADY L. ENRIGHT 3 years Senior Vice President - Serves as an equity
Capital World Investors portfolio counselor
Investment professional for
17 years in total;
12 years with Capital
Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------
Information regarding the portfolio counselors' compensation, their ownership of
securities in the fund and other accounts they manage can be found in the
statement of additional information.
12
Fundamental Investors / Prospectus
<PAGE>
CERTAIN PRIVILEGES AND/OR SERVICES DESCRIBED ON THE FOLLOWING PAGES OF THIS
PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL INFORMATION MAY NOT BE AVAILABLE
TO YOU DEPENDING ON YOUR INVESTMENT DEALER OR RETIREMENT PLAN RECORDKEEPER.
PLEASE SEE YOUR FINANCIAL ADVISER, INVESTMENT DEALER OR PLAN RECORDKEEPER FOR
MORE INFORMATION.
13
Fundamental Investors / Prospectus
<PAGE>
Purchase, exchange and sale of shares
AMERICAN FUNDS SERVICE COMPANY, THE FUND'S TRANSFER AGENT, ON BEHALF OF THE FUND
AND AMERICAN FUNDS DISTRIBUTORS,/(R)/ THE FUND'S DISTRIBUTOR, IS REQUIRED BY
LAW TO OBTAIN CERTAIN PERSONAL INFORMATION FROM YOU OR ANY OTHER PERSON(S)
ACTING ON YOUR BEHALF IN ORDER TO VERIFY YOUR OR SUCH PERSON'S IDENTITY. IF YOU
DO NOT PROVIDE THE INFORMATION, THE TRANSFER AGENT MAY NOT BE ABLE TO OPEN YOUR
ACCOUNT. IF THE TRANSFER AGENT IS UNABLE TO VERIFY YOUR IDENTITY OR THAT OF ANY
OTHER PERSON(S) AUTHORIZED TO ACT ON YOUR BEHALF, OR BELIEVES IT HAS IDENTIFIED
POTENTIALLY CRIMINAL ACTIVITY, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE
THE RIGHT TO CLOSE YOUR ACCOUNT OR TAKE SUCH OTHER ACTION THEY DEEM REASONABLE
OR REQUIRED BY LAW.
PURCHASES AND EXCHANGES
Eligible retirement plans generally may open an account and purchase Class A or
R shares by contacting any investment dealer (who may impose transaction charges
in addition to those described in this prospectus) authorized to sell the fund's
shares. Some or all R share classes may not be available through certain
investment dealers. Additional shares may be purchased through a plan's
administrator or recordkeeper.
Class A shares are generally not available for retirement plans using the
PlanPremier or Recordkeeper Direct recordkeeping programs.
Class R shares generally are available only to 401(k) plans, 457 plans, 403(b)
plans, profit-sharing and money purchase pension plans, defined benefit plans
and nonqualified deferred compensation plans. Class R shares also are generally
available only to retirement plans where plan level or omnibus accounts are held
on the books of the fund. Class R-5 shares generally are available only to
retirement plans with $1 million or more in plan assets. In addition, Class R-5
shares are available for investment by American Funds Target Date Retirement
Series/(R)/ and other registered investment companies approved by the fund.
Class R shares generally are not available to retail nonretirement accounts,
traditional and Roth individual retirement accounts (IRAs), Coverdell Education
Savings Accounts, SEPs, SARSEPs, SIMPLE IRAs and 529 college savings plans.
Shares of the fund offered through this prospectus generally may be exchanged
into shares of the same class of other American Funds. Exchanges of Class A
shares from American Funds money market funds purchased without a sales charge
generally will be subject to the appropriate sales charge.
FREQUENT TRADING OF FUND SHARES
The fund and American Funds Distributors reserve the right to reject any
purchase order for any reason. The fund is not designed to serve as a vehicle
for frequent trading. Frequent trading of fund shares may lead to increased
costs to the fund and less efficient management of the fund's portfolio,
potentially resulting in dilution of the value of the shares held by long-term
shareholders. Accordingly, purchases, including those that are part of
14
Fundamental Investors / Prospectus
<PAGE>
exchange activity that the fund or American Funds Distributors has determined
could involve actual or potential harm to the fund, may be rejected.
The fund, through its transfer agent, American Funds Service Company, maintains
surveillance procedures that are designed to detect frequent trading in fund
shares. Under these procedures, various analytics are used to evaluate factors
that may be indicative of frequent trading. For example, transactions in fund
shares that exceed certain monetary thresholds may be scrutinized. American
Funds Service Company also may review transactions that occur close in time to
other transactions in the same account or in multiple accounts under common
ownership or influence. Trading activity that is identified through these
procedures or as a result of any other information available to the fund will be
evaluated to determine whether such activity might constitute frequent trading.
These procedures may be modified from time to time as appropriate to improve the
detection of frequent trading, to facilitate monitoring for frequent trading in
particular retirement plans or other accounts, and to comply with applicable
laws.
In addition to the fund's broad ability to restrict potentially harmful trading
as described above, the fund's board of directors has adopted a "purchase
blocking policy" under which any shareholder redeeming shares having a value of
$5,000 or more from the fund will be precluded from investing in the fund for 30
calendar days after the redemption transaction. This policy also applies to
redemptions and investments that are part of exchange transactions. Under the
fund's purchase blocking policy, certain purchases will not be prevented and
certain redemptions will not trigger a purchase block, such as: systematic
redemptions and purchases where the entity maintaining the shareholder account
is able to identify the transaction as a systematic redemption or purchase;
purchases and redemptions of shares having a value of less than $5,000;
transactions in Class 529 shares; purchases and redemptions resulting from
reallocations by American Funds Target Date Retirement Series; retirement plan
contributions, loans and distributions (including hardship withdrawals)
identified as such on the retirement plan recordkeeper's system; and purchase
transactions involving transfers of assets, rollovers, Roth IRA conversions and
IRA recharacterizations, where the entity maintaining the shareholder account is
able to identify the transaction as one of these types of transactions.
The fund reserves the right to waive the purchase blocking policy with respect
to specific shareholder accounts in those instances where American Funds Service
Company determines that its surveillance procedures are adequate to detect
frequent trading in fund shares.
American Funds Service Company will work with certain intermediaries (such as
investment dealers holding shareholder accounts in street name, retirement plan
recordkeepers, insurance company separate accounts and bank trust companies) to
apply their own procedures, provided that American Funds Service Company
believes the intermediary's procedures are reasonably designed to enforce the
frequent trading policies of
15
Fundamental Investors / Prospectus
<PAGE>
the fund. You should refer to disclosures provided by the intermediaries with
which you have an account to determine the specific trading restrictions that
apply to you.
If American Funds Service Company identifies any activity that may constitute
frequent trading, it reserves the right to contact the intermediary and request
that the intermediary either provide information regarding an account owner's
transactions or restrict the account owner's trading. If American Funds Service
Company is not satisfied that the intermediary has taken appropriate action,
American Funds Service Company may terminate the intermediary's ability to
transact in fund shares.
There is no guarantee that all instances of frequent trading in fund shares will
be prevented.
NOTWITHSTANDING THE FUND'S SURVEILLANCE PROCEDURES AND PURCHASE BLOCKING POLICY,
ALL TRANSACTIONS IN FUND SHARES REMAIN SUBJECT TO THE FUND'S AND AMERICAN FUNDS
DISTRIBUTORS' RIGHT TO RESTRICT POTENTIALLY ABUSIVE TRADING GENERALLY (INCLUDING
THE TYPES OF TRANSACTIONS DESCRIBED ABOVE THAT WILL NOT BE PREVENTED OR TRIGGER
A BLOCK UNDER THE PURCHASE BLOCKING POLICY). SEE THE STATEMENT OF ADDITIONAL
INFORMATION FOR MORE INFORMATION ABOUT HOW AMERICAN FUNDS SERVICE COMPANY MAY
ADDRESS OTHER POTENTIALLY ABUSIVE TRADING ACTIVITY IN THE AMERICAN FUNDS.
SALES
Please contact your plan administrator or recordkeeper in order to sell shares
from your retirement plan.
If you notify American Funds Service Company, you may reinvest proceeds from a
redemption, dividend payment or capital gain distribution without a sales charge
in the same fund or other American Funds provided that the reinvestment occurs
within 90 days after the date of the redemption or distribution and is made into
the same account from which you redeemed the shares or received the
distribution. If the account has been closed, you may reinvest without a sales
charge if the new receiving account has the same registration as the closed
account. Proceeds will be reinvested in the same share class from which the
original redemption or distribution was made. Redemption proceeds of Class A
shares representing direct purchases in American Funds money market funds that
are reinvested in non-money market American Funds will be subject to a sales
charge. Proceeds will be reinvested at the next calculated net asset value after
your request is received and accepted by American Funds Service Company. For
purposes of this "right of reinvestment policy," automatic transactions
(including, for example, automatic purchases, withdrawals and payroll
deductions) and ongoing retirement plan contributions are not eligible for
investment without a sales charge. See the statement of additional information
for further information. You may not reinvest proceeds in the American Funds as
described in this paragraph if such proceeds are subject to a purchase block as
described under "Frequent trading of fund shares" in this prospectus. This
paragraph does not apply to certain rollover investments as described under
"Rollovers from retirement plans to IRAs" in this prospectus.
16
Fundamental Investors / Prospectus
<PAGE>
VALUING SHARES
The net asset value of each share class of the fund is the value of a single
share. The fund calculates the net asset value each day the New York Stock
Exchange is open for trading as of approximately 4 p.m. New York time, the
normal close of regular trading. Assets are valued primarily on the basis of
market quotations. However, the fund has adopted procedures for making "fair
value" determinations if market quotations are not readily available or are not
considered reliable. For example, if events occur between the close of markets
outside the United States and the close of regular trading on the New York Stock
Exchange that, in the opinion of the investment adviser, materially affect the
value of any of the fund's securities that principally trade in those
international markets, those securities will be valued in accordance with fair
value procedures. Use of these procedures is intended to result in more
appropriate net asset values. In addition, such use will reduce, if not
eliminate, potential arbitrage opportunities otherwise available to short-term
investors.
Because the fund may hold securities that are primarily listed on foreign
exchanges that trade on weekends or days when the fund does not price its
shares, the value of securities held in the fund may change on days when you
will not be able to purchase or redeem fund shares.
Your shares will be purchased at the net asset value (plus any applicable sales
charge in the case of Class A shares) or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request.
MOVING BETWEEN SHARE CLASSES AND ACCOUNTS
Please see the statement of additional information for details and limitations
on moving investments in certain share classes to different share classes, and
on moving investments held in certain accounts to different accounts.
Sales charges
CLASS A SHARES
The initial sales charge you pay each time you buy Class A shares differs
depending upon the amount you invest and may be reduced or eliminated for larger
purchases as indicated below. The "offering price," the price you pay to buy
shares, includes any applicable sales charge, which will be deducted directly
from your investment. Shares acquired through reinvestment of dividends or
capital gain distributions are not subject to an initial sales charge.
17
Fundamental Investors / Prospectus
<PAGE>
SALES CHARGE AS A
PERCENTAGE OF:
DEALER
NET COMMISSION
OFFERING AMOUNT AS A PERCENTAGE
INVESTMENT PRICE INVESTED OF OFFERING PRICE
------------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 5.00%
------------------------------------------------------------------------------
$25,000 but less than $50,000 5.00 5.26 4.25
------------------------------------------------------------------------------
$50,000 but less than $100,000 4.50 4.71 3.75
------------------------------------------------------------------------------
$100,000 but less than $250,000 3.50 3.63 2.75
------------------------------------------------------------------------------
$250,000 but less than $500,000 2.50 2.56 2.00
------------------------------------------------------------------------------
$500,000 but less than $750,000 2.00 2.04 1.60
------------------------------------------------------------------------------
$750,000 but less than $1 million 1.50 1.52 1.20
------------------------------------------------------------------------------
$1 million or more and certain other none none see below
investments described below
------------------------------------------------------------------------------
The sales charge, expressed as a percentage of the offering price or the net
amount invested, may be higher or lower than the percentages described in the
table above due to rounding. This is because the dollar amount of the sales
charge is determined by subtracting the net asset value of the shares purchased
from the offering price, which is calculated to two decimal places using
standard rounding criteria. The impact of rounding will vary with the size of
the investment and the net asset value of the shares.
CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES
The following investments are not subject to any initial or contingent deferred
sales charge if American Funds Service Company is properly notified of the
nature of the investment:
. investments made by accounts that are part of certain qualified fee-based
programs and that purchased Class A shares before the discontinuation of your
investment dealer's load-waived Class A share program with the American Funds;
and
. certain rollover investments from retirement plans to IRAs (see "Rollovers
from retirement plans to IRAs" in this prospectus for more information).
The distributor may pay dealers up to 1% on investments made in Class A shares
with no initial sales charge. The fund may reimburse the distributor for these
payments through its plans of distribution (see "Plans of distribution" in this
prospectus).
Certain other investors may qualify to purchase shares without a sales charge,
such as employees of investment dealers and registered investment advisers
authorized to sell American Funds, and employees of The Capital Group Companies.
Please see the statement of additional information for more information.
18
Fundamental Investors / Prospectus
<PAGE>
EMPLOYER-SPONSORED RETIREMENT PLANS
Employer-sponsored retirement plans that are eligible to purchase Class R
shares may instead purchase Class A shares and pay the applicable Class A sales
charge, provided their recordkeepers can properly apply a sales charge on plan
investments. These plans are not eligible to make initial purchases of $1
million or more in Class A shares and thereby invest in Class A shares without
a sales charge, nor are they eligible to establish a statement of intention
that qualifies them to purchase Class A shares without a sales charge. More
information about statements of intention can be found under "Sales charge
reductions" in this prospectus. Plans investing in Class A shares with a sales
charge may purchase additional Class A shares in accordance with the sales
charge table in this prospectus.
Employer-sponsored retirement plans that invested in Class A shares without any
sales charge on or before March 31, 2004, and that continue to meet the
eligibility requirements in effect as of that date for purchasing Class A
shares at net asset value, may continue to purchase Class A shares without any
initial or contingent deferred sales charge.
A 403(b) plan may not invest in Class A, B or C shares on or after January 1,
2009, unless such plan was invested in Class A, B or C shares prior to that
date.
CLASS R SHARES
Class R shares are sold without any initial or contingent deferred sales charge.
The distributor will pay dealers annually an asset-based compensation of up to
1.00% for sales of Class R-1 shares, up to .75% for Class R-2 shares, up to .50%
for Class R-3 shares and up to .25% for Class R-4 shares. No dealer compensation
is paid on sales of Class R-5 shares. The fund may reimburse the distributor for
these payments through its plans of distribution (see "Plans of distribution" in
this prospectus).
Sales charge reductions
TO RECEIVE A REDUCTION IN YOUR CLASS A INITIAL SALES CHARGE, YOU MUST LET YOUR
FINANCIAL ADVISER OR AMERICAN FUNDS SERVICE COMPANY KNOW AT THE TIME YOU
PURCHASE SHARES THAT YOU QUALIFY FOR SUCH A REDUCTION. IF YOU DO NOT LET YOUR
ADVISER OR AMERICAN FUNDS SERVICE COMPANY KNOW THAT YOU ARE ELIGIBLE FOR A
REDUCTION, YOU MAY NOT RECEIVE A SALES CHARGE DISCOUNT TO WHICH YOU ARE
OTHERWISE ENTITLED. In order to determine your eligibility to receive a sales
charge discount, it may be necessary for you to provide your adviser or American
Funds Service Company with information and records (including account
statements) of all relevant accounts invested in the American Funds.
IN ADDITION TO THE INFORMATION IN THIS PROSPECTUS, YOU MAY OBTAIN MORE
INFORMATION ABOUT SHARE CLASSES, SALES CHARGES AND SALES CHARGE REDUCTIONS
THROUGH A LINK ON THE HOME
19
Fundamental Investors / Prospectus
<PAGE>
PAGE OF THE AMERICAN FUNDS WEBSITE AT AMERICANFUNDS.COM, FROM THE STATEMENT OF
ADDITIONAL INFORMATION OR FROM YOUR FINANCIAL ADVISER.
REDUCING YOUR CLASS A INITIAL SALES CHARGE
Consistent with the policies described in this prospectus, two or more
retirement plans of an employer or employer's affiliates may combine all of
their American Funds investments to reduce their Class A sales charge. Certain
investments in the American Funds Target Date Retirement Series may also be
combined for this purpose. Please see the American Funds Target Date Retirement
Series prospectus for further information. However, for this purpose,
investments representing direct purchases of American Funds money market funds
are excluded. Following are different ways that you may qualify for a reduced
Class A sales charge:
CONCURRENT PURCHASES
Simultaneous purchases of any class of shares of two or more American Funds
(excluding American Funds money market funds) may be combined to qualify for a
reduced Class A sales charge.
RIGHTS OF ACCUMULATION
You may take into account your accumulated holdings in all share classes of the
American Funds (excluding American Funds money market funds) to determine the
initial sales charge you pay on each purchase of Class A shares. Subject to
your investment dealer's or recordkeeper's capabilities, your accumulated
holdings will be calculated as the higher of (a) the current value of your
existing holdings or (b) the amount you invested (including reinvested
dividends and capital gains, but excluding capital appreciation) less any
withdrawals. Please see the statement of additional information for details.
You should retain any records necessary to substantiate the historical amounts
you have invested.
STATEMENT OF INTENTION
You may reduce your Class A sales charge by establishing a statement of
intention. A statement of intention allows you to combine all purchases of all
share classes of the American Funds (excluding American Funds money market
funds) you intend to make over a 13-month period to determine the applicable
sales charge; however, purchases made under a right of reinvestment,
appreciation of your holdings, and reinvested dividends and capital gains do
not count as purchases made during the statement period. The market value of
your existing holdings eligible to be aggregated as of the day immediately
before the start of the statement period may be credited toward satisfying the
statement. A portion of your account may be held in escrow to cover additional
Class A sales charges that may be due if your total purchases over the
statement period do not qualify you for the applicable sales charge reduction.
Employer-sponsored retirement
20
Fundamental Investors / Prospectus
<PAGE>
plans may be restricted from establishing statements of intention. See "Sales
charges" in this prospectus for more information.
RIGHT OF REINVESTMENT
Please see the "Sales" section of "Purchase, exchange and sale of shares" in
this prospectus for information on how to reinvest proceeds from a redemption,
dividend payment or capital gain distribution without a sales charge.
Rollovers from retirement plans to IRAs
Assets from retirement plans may be invested in Class A, B, C or F shares
through an IRA rollover, subject to the other provisions of this prospectus and
the prospectus for nonretirement plan shareholders. More information on Class B,
C and F shares can be found in the fund's prospectus for nonretirement plan
shareholders. Rollovers invested in Class A shares from retirement plans will be
subject to applicable sales charges. The following rollovers to Class A shares
will be made without a sales charge:
. rollovers to IRAs from 403(b) plans with Capital Bank and Trust Company as
custodian; and
. rollovers to IRAs that are attributable to American Funds investments, if they
meet the following requirements:
-- the assets being rolled over were invested in American Funds at the time of
distribution; and
-- the rolled over assets are contributed to an American Funds IRA with Capital
Bank and Trust Company as custodian.
IRA rollover assets that roll over without a sales charge as described above
will not be subject to a contingent deferred sales charge and investment dealers
will be compensated solely with an annual service fee that begins to accrue
immediately. IRA rollover assets invested in Class A shares that are not
attributable to American Funds investments, as well as future contributions to
the IRA, will be subject to sales charges and the terms and conditions generally
applicable to Class A share investments as described in this prospectus and the
statement of additional information.
Plans of distribution
The fund has plans of distribution or "12b-1 plans" for certain share classes,
under which it may finance activities primarily intended to sell shares,
provided the categories of expenses are approved in advance by the fund's board
of directors. The plans provide for payments, based on annualized percentages of
average daily net assets, of up to .25% for Class A shares, up to 1.00% for
Class R-1 and R-2 shares, up to .75% for Class R-3 shares and up to .50% for
Class R-4 shares. For all share classes indicated above, up to
21
Fundamental Investors / Prospectus
<PAGE>
.25% of these expenses may be used to pay service fees to qualified dealers for
providing certain shareholder services. The amount remaining for each share
class may be used for distribution expenses.
The 12b-1 fees paid by the fund, as a percentage of average net assets for the
previous fiscal year, are indicated in the Annual Fund Operating Expenses table
under "Fees and expenses of the fund" in this prospectus. Since these fees are
paid out of the fund's assets or income on an ongoing basis, over time they will
increase the cost and reduce the return of your investment.
Other compensation to dealers
American Funds Distributors, at its expense, currently provides additional
compensation to investment dealers. These payments may be made, at the
discretion of American Funds Distributors, to the top 100 dealers (or their
affiliates) that have sold shares of the American Funds. The level of payments
made to a qualifying firm in any given year will vary and in no case would
exceed the sum of (a) .10% of the previous year's American Funds sales by that
dealer and (b) .02% of American Funds assets attributable to that dealer. For
calendar year 2008, aggregate payments made by American Funds Distributors to
dealers were less than .02% of the average assets of the American Funds.
Aggregate payments may also change from year to year. A number of factors will
be considered in determining payments, including the qualifying dealer's sales,
assets and redemption rates, and the quality of the dealer's relationship with
American Funds Distributors. American Funds Distributors makes these payments to
help defray the costs incurred by qualifying dealers in connection with efforts
to educate financial advisers about the American Funds so that they can make
recommendations and provide services that are suitable and meet shareholder
needs. American Funds Distributors will, on an annual basis, determine the
advisability of continuing these payments. American Funds Distributors may also
pay expenses associated with meetings conducted by dealers outside the top 100
firms to facilitate educating financial advisers and shareholders about the
American Funds. If investment advisers, distributors or other affiliates of
mutual funds pay additional compensation or other incentives in differing
amounts, dealer firms and their advisers may have financial incentives for
recommending a particular mutual fund over other mutual funds. You should
consult with your financial adviser and review carefully any disclosure by your
financial adviser's firm as to compensation received.
22
Fundamental Investors / Prospectus
<PAGE>
Distributions and taxes
DIVIDENDS AND DISTRIBUTIONS
The fund intends to distribute dividends to shareholders, usually in February,
May, August and December.
Capital gains, if any, are usually distributed in December and February. When a
dividend or capital gain is distributed, the net asset value per share is
reduced by the amount of the payment.
All dividends and capital gain distributions paid to retirement plan
shareholders will be automatically reinvested.
TAXES ON DIVIDENDS AND DISTRIBUTIONS
Dividends and capital gains distributed by the fund to tax-deferred retirement
plan accounts are not taxable currently.
TAXES ON TRANSACTIONS
Exchanges within a tax-deferred retirement plan account will not result in a
capital gain or loss for federal or state income tax purposes. With limited
exceptions, distributions from a retirement plan account are taxable as ordinary
income.
PLEASE SEE YOUR TAX ADVISER FOR MORE INFORMATION.
23
Fundamental Investors / Prospectus
<PAGE>
Financial highlights
The Financial Highlights table is intended to help you understand the fund's
results for the past five fiscal years. Certain information reflects financial
results for a single share of a particular class. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the fund (assuming reinvestment of all dividends and capital gain
distributions). Where indicated, figures in the table reflect the impact, if
any, of certain reimbursements/waivers from Capital Research and Management
Company. For more information about these reimbursements/waivers, see the
footnotes to the Annual Fund Operating Expenses table under "Fees and expenses
of the fund" in this prospectus and the fund's annual report. The information in
the Financial Highlights table has been audited by Deloitte & Touche LLP, whose
report, along with the fund's financial statements, is included in the statement
of additional information, which is available upon request.
(LOSS) INCOME FROM INVESTMENT OPERATIONS/1/ DIVIDENDS AND DISTRIBUTIONS
Net (losses)
gains on
Net securities
asset (both Dividends Distributions Total
value, Net realized Total from (from net (from dividends
beginning investment and investment investment capital and
of year income/2/ unrealized) operations income) gains) distributions
----------------------------------------------------------------------------------------------------------------------------
CLASS A:
Year ended 12/31/2008 $42.45 $ .60 $(17.23) $(16.63) $ (.58) $ (.26) $ (.84)
Year ended 12/31/2007 40.05 1.03 4.39 5.42 (.95) (2.07) (3.02)
Year ended 12/31/2006 35.40 .62 6.16 6.78 (.56) (1.57) (2.13)
Year ended 12/31/2005 32.25 .58 3.16 3.74 (.59) -- (.59)
Year ended 12/31/2004 28.85 .61 3.35 3.96 (.56) -- (.56)
----------------------------------------------------------------------------------------------------------------------------
CLASS R-1:
Year ended 12/31/2008 42.31 .32 (17.18) (16.86) (.29) (.26) (.55)
Year ended 12/31/2007 39.93 .72 4.33 5.05 (.60) (2.07) (2.67)
Year ended 12/31/2006 35.31 .29 6.13 6.42 (.23) (1.57) (1.80)
Year ended 12/31/2005 32.18 .29 3.16 3.45 (.32) -- (.32)
Year ended 12/31/2004 28.79 .37 3.33 3.70 (.31) -- (.31)
----------------------------------------------------------------------------------------------------------------------------
CLASS R-2:
Year ended 12/31/2008 $42.30 $ .30 $(17.17) $(16.87) $ (.28) $ (.26) $ (.54)
Year ended 12/31/2007 39.92 .70 4.34 5.04 (.59) (2.07) (2.66)
Year ended 12/31/2006 35.29 .30 6.14 6.44 (.24) (1.57) (1.81)
Year ended 12/31/2005 32.17 .30 3.14 3.44 (.32) -- (.32)
Year ended 12/31/2004 28.77 .38 3.34 3.72 (.32) -- (.32)
----------------------------------------------------------------------------------------------------------------------------
CLASS R-3:
Year ended 12/31/2008 42.38 .48 (17.20) (16.72) (.46) (.26) (.72)
Year ended 12/31/2007 39.98 .92 4.34 5.26 (.79) (2.07) (2.86)
Year ended 12/31/2006 35.35 .47 6.14 6.61 (.41) (1.57) (1.98)
Year ended 12/31/2005 32.21 .45 3.16 3.61 (.47) -- (.47)
Year ended 12/31/2004 28.82 .50 3.33 3.83 (.44) -- (.44)
----------------------------------------------------------------------------------------------------------------------------
CLASS R-4:
Year ended 12/31/2008 42.39 .58 (17.19) (16.61) (.57) (.26) (.83)
Year ended 12/31/2007 39.99 1.05 4.34 5.39 (.92) (2.07) (2.99)
Year ended 12/31/2006 35.36 .59 6.14 6.73 (.53) (1.57) (2.10)
Year ended 12/31/2005 32.22 .55 3.16 3.71 (.57) -- (.57)
Year ended 12/31/2004 28.83 .60 3.33 3.93 (.54) -- (.54)
----------------------------------------------------------------------------------------------------------------------------
(The Financial Highlights table continues on the following page.)
----------------------------------------------------------------------------------------------------------------------------
CLASS R-5:
Year ended 12/31/2008 $42.46 $ .69 $(17.23) $(16.54) $ (.67) $ (.26) $ (.93)
Year ended 12/31/2007 40.06 1.18 4.34 5.52 (1.05) (2.07) (3.12)
Year ended 12/31/2006 35.41 .71 6.16 6.87 (.65) (1.57) (2.22)
Year ended 12/31/2005 32.26 .65 3.17 3.82 (.67) -- (.67)
Year ended 12/31/2004 28.86 .68 3.35 4.03 (.63) -- (.63)
Ratio of Ratio of
expenses expenses
to to
average average Ratio
Net net net of net
assets, assets assets income
Net asset end of before after to
value, year reim- reim- average
end of Total (in bursements/ bursements/ net
year return/3,4/ millions) waivers waivers/4/ assets/2,4/
--------------------------------------------------------------------------------------------------------
CLASS A:
Year ended 12/31/2008 $24.98 (39.70)% $24,443 .63% .61% 1.70%
Year ended 12/31/2007 42.45 13.55 38,877 .60 .57 2.40
Year ended 12/31/2006 40.05 19.24 32,187 .61 .58 1.60
Year ended 12/31/2005 35.40 11.68 24,390 .62 .60 1.75
Year ended 12/31/2004 32.25 13.91 21,543 .63 .63 2.05
--------------------------------------------------------------------------------------------------------
CLASS R-1:
Year ended 12/31/2008 24.90 (40.16) 61 1.43 1.41 .91
Year ended 12/31/2007 42.31 12.62 57 1.44 1.42 1.67
Year ended 12/31/2006 39.93 18.19 23 1.47 1.43 .74
Year ended 12/31/2005 35.31 10.74 11 1.50 1.46 .88
Year ended 12/31/2004 32.18 12.92 6 1.53 1.49 1.26
--------------------------------------------------------------------------------------------------------
CLASS R-2:
Year ended 12/31/2008 $24.89 (40.19)% $ 366 1.49% 1.47% .85%
Year ended 12/31/2007 42.30 12.61 471 1.46 1.40 1.62
Year ended 12/31/2006 39.92 18.26 291 1.54 1.41 .77
Year ended 12/31/2005 35.29 10.73 155 1.64 1.43 .91
Year ended 12/31/2004 32.17 13.02 93 1.76 1.45 1.29
--------------------------------------------------------------------------------------------------------
CLASS R-3:
Year ended 12/31/2008 24.94 (39.89) 1,058 .98 .95 1.37
Year ended 12/31/2007 42.38 13.17 1,157 .97 .94 2.12
Year ended 12/31/2006 39.98 18.75 525 .99 .96 1.21
Year ended 12/31/2005 35.35 11.26 220 1.01 .98 1.35
Year ended 12/31/2004 32.21 13.41 125 1.05 1.04 1.69
--------------------------------------------------------------------------------------------------------
CLASS R-4:
Year ended 12/31/2008 24.95 (39.70) 942 .67 .65 1.68
Year ended 12/31/2007 42.39 13.51 879 .66 .64 2.42
Year ended 12/31/2006 39.99 19.12 438 .67 .65 1.52
Year ended 12/31/2005 35.36 11.61 205 .69 .66 1.66
Year ended 12/31/2004 32.22 13.85 80 .69 .69 2.04
--------------------------------------------------------------------------------------------------------
(The Financial Highlights table continues on the following page.)
--------------------------------------------------------------------------------------------------------
CLASS R-5:
Year ended 12/31/2008 $24.99 (39.53)% $ 1,077 .37% .35% 1.98%
Year ended 12/31/2007 42.46 13.81 1,014 .37 .34 2.73
Year ended 12/31/2006 40.06 19.50 481 .38 .35 1.83
Year ended 12/31/2005 35.41 11.94 265 .39 .36 1.96
Year ended 12/31/2004 32.26 14.19 141 .39 .39 2.31
24
Fundamental Investors / Prospectus
<PAGE>
YEAR ENDED DECEMBER 31
2008 2007 2006 2005 2004
------------------------------------------------------------------------------------
PORTFOLIO TURNOVER
RATE FOR ALL CLASSES 29% 27% 21% 24% 30%
OF SHARES
25
Fundamental Investors / Prospectus
<PAGE>
1 Based on average shares outstanding.
2 For the year ended December 31, 2007, this column reflects the impact of a
corporate action event that resulted in a one-time increase to net investment
income. If the corporate action had not occurred, the Class A net investment
income per share and ratio of net income to average net assets would have been
lower by $0.39 and .90%, respectively. The impact to the other share classes
would have been approximately the same.
3 Total returns exclude any applicable sales charges.
4 This column reflects the impact, if any, of certain reimbursements/waivers
from Capital Research and Management Company. During the years shown, Capital
Research and Management Company reduced fees for investment advisory services.
In addition, during some of the years shown, Capital Research and Management
Company paid a portion of the fund's transfer agent fees for certain retirement
plan share classes.
26
Fundamental Investors / Prospectus
<PAGE>
NOTES
27
Fundamental Investors / Prospectus
<PAGE>
[Logo - American Funds /(R)/] The right choice for the long term/(R)/
FOR SHAREHOLDER SERVICES American Funds Service Company
800/421-0180
FOR RETIREMENT PLAN SERVICES Call your employer or plan
administrator
FOR ADVISER MARKETING American Funds Distributors
800/421-9900
FOR 529 PLANS American Funds Service Company
800 /421-0180, ext. 529
FOR 24-HOUR INFORMATION American FundsLine
800/325-3590
americanfunds.com
Telephone calls you have with the American Funds organization may be
monitored or recorded for quality assurance, verification and/or
recordkeeping purposes. By speaking with us on the telephone, you are
giving your consent to such monitoring and recording.
-----------------------------------------------------------------------------------
MULTIPLE TRANSLATIONS This prospectus may be translated into other languages.
If there is any inconsistency or ambiguity in the meaning of any translated word
or phrase, the English text will prevail.
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS The shareholder reports contain
additional information about the fund, including financial statements,
investment results, portfolio holdings, a discussion of market conditions and
the fund's investment strategies and the independent registered public
accounting firm's report (in the annual report).
STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The current SAI,
as amended from time to time, contains more detailed information about the fund,
including the fund's financial statements, and is incorporated by reference into
this prospectus. This means that the current SAI, for legal purposes, is part of
this prospectus. The codes of ethics describe the personal investing policies
adopted by the fund, the fund's investment adviser and its affiliated companies.
The codes of ethics and current SAI are on file with the Securities and Exchange
Commission (SEC). These and other related materials about the fund are available
for review or to be copied at the SEC's Public Reference Room in Washington, DC
(202/551-8090) or on the EDGAR database on the SEC's website at sec.gov or,
after payment of a duplicating fee, via e-mail request to publicinfo@sec.gov or
by writing to the SEC's Public Reference Section, 100 F Street, NE, Washington,
DC 20549-0102. The codes of ethics, current SAI and shareholder reports are also
available, free of charge, on americanfunds.com.
E-DELIVERY AND HOUSEHOLD MAILINGS Each year you are automatically sent an
updated prospectus and annual and semi-annual reports for the fund. You may also
occasionally receive proxy statements for the fund. In order to reduce the
volume of mail you receive, when possible, only one copy of these documents will
be sent to shareholders who are part of the same family and share the same
household address. You may elect to receive these documents electronically in
lieu of paper form by enrolling in e-delivery on our website, americanfunds.com.
If you would like to opt out of household-based mailings or receive a
complimentary copy of the current SAI, codes of ethics or annual/semi-annual
report to shareholders, please call American Funds Service Company at
800/421-0180 or write to the secretary of the fund at P.O. Box 7650, San
Francisco, California 94120.
SECURITIES INVESTOR PROTECTION CORPORATION (SIPC) Shareholders may obtain
information about SIPC on its website at sipc.org or by calling 202/371-8300.
Investment Company File No. 811-00032
RPGEPR-910-0309P Litho in USA CGD/B/8032
----------------------------------------------------------------------------------------------------------------------------------------
THE CAPITAL GROUP COMPANIES
American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust
|
(a-1)
|
Articles of
Incorporation - previously filed (see P/E Amendment No. 81 filed
2/28/97, No. 85 filed 3/13/00, No. 86 filed 3/8/01, No. 87 filed 2/15/02,
No. 93 filed 2/28/07 and No. 95 filed
7/1/08)
|
|
(a-2)
|
Articles
Supplementary as filed with the State of Maryland
9/26/08
|
|
(b)
|
By-laws – By-laws as
amended 5/15/07 – previously filed (see P/E Amendment No. 94 filed
2/29/08)
|
|
(c)
|
Instruments Defining Rights of
Security Holders – Form of share certificate
– previously filed (see P/E Amendment No. 86 filed
3/8/01)
|
|
(d)
|
Investment Advisory Contracts
– Amended Investment Advisory and Service Agreement dated 9/1/07 –
previously filed (see P/E Amendment No. 94 filed
2/29/08)
|
|
(e-1)
|
Underwriting Contracts –
Form of Selling Group Agreements – previously filed (see P/E Amendment No.
88 filed 5/13/02); Form of Institutional Selling Group Agreement (see P/E
Amendment No. 91 filed 2/28/05); Form of Amendment to Selling Group
Agreement effective 11/1/06 – previously filed (see P/E Amendment No. 93
filed 2/28/07); Form of Amendment to Selling Group Agreement effective
2/1/07 – previously filed (see P/E Amendment No. 93 filed 2/28/07); Form
of Amendment to Institutional Selling Group Agreement effective 2/1/07 –
previously filed (see P/E Amendment No. 94 filed 2/29/08); and Form of
Amended and Restated Principal Underwriting Agreement dated 6/16/08 –
previously filed (see P/E Amendment No. 95 filed
7/1/08)
|
|
(e-2)
|
Form of
Amendment to Selling Group Agreement effective 10/1/08; Form of Amendment
to Institutional Selling Group Agreement effective 10/1/08; Form of Class
F Share Participation Agreement; Form of Amendment to Class F Share
Participation Agreement effective 8/1/08; Form of Bank-Trust Participation
Agreement for Class F Shares; and Form of Amendment to Bank-Trust
Participation Agreement for Class F Shares effective
8/1/08
|
|
(f)
|
Bonus or Profit Sharing
Contracts – Form of Deferred Compensation Plan as amended 1/1/08 –
previously filed (see P/E Amendment No. 94 filed
2/29/08)
|
|
(g)
|
Custodian Agreements –
Form of Global Custody Agreement dated 12/14/06 – previously filed (see
P/E Amendment No. 93 filed 2/28/07)
|
|
(h-1)
|
Other Material Contracts
- Amended Shareholder Services Agreement as of 4/1/03 - previously filed
(see P/E Amendment No. 90 filed 2/26/04); and Form of Indemnification
Agreement dated 7/1/04 – previously filed – see P/E Amendment 91 filed
2/28/05); Form of Amendment to Shareholder Services Agreement dated
11/1/06 – previously filed (see P/E Amendment No. 93 filed 2/28/07); Form
of Amended and Restated Administrative Service Agreement dated 6/16/08 –
previously filed (see P/E Amendment No. 95 filed
7/1/08)
|
|
(h-2)
|
Form of
Amendment of Amended Shareholder Services Agreement dated
11/1/08
|
|
(i)
|
Legal Opinion –
Legal Opinion previously filed (see P/E Amendment No. 85 filed 3/13/00,
No. 86 filed 3/8/01, No. 87 filed 2/15/02, No. 88 filed 5/13/02, No. 95
filed 7/1/08)
|
|
(j)
|
Other Opinions – Consent
of Independent Registered Public Accounting
Firm
|
|
(k)
|
Omitted Financial
Statements - none
|
|
(l)
|
Initial capital
agreements - not applicable to this
filing
|
|
(m)
|
Rule 12b-1 Plan – Forms
of Plans of Distribution – Class A Plan of Distribution - previously filed
(No. 81 filed 2/28/97); Class 529-A – previously filed (see P/E Amendment
No. 87 filed 2/15/02; and Forms of Amended Plans of Distribution for
Classes B, C, F, 529-B, 529-C, 529-E, 529-F and R-1, R-2, R-3 and R-4
dated 8/18/05 – previously filed (see P/E Amendment No. 92 filed 2/28/06);
Forms of Amendment to Plan of Distribution – Class F-1 and Class 529-F-1
dated 6/16/08 – previously filed (see P/E Amendment No. 95 filed
7/1/08)
|
|
(n)
|
Rule 18f-3 – Form of
Amended and Restated Multiple Class Plan dated 6/16/08 – previously filed
(see P/E Amendment No. 95 filed
7/1/08)
|
|
(o)
|
Reserved
|
|
(p)
|
Code of Ethics – Code of
Ethics for The Capital Group Companies dated December 2008; and Code
of Ethics for Registrant dated December
2005
|
|
1.
|
A corporation
may indemnify any director made a party to any proceeding by reason of
service in that capacity unless it is established
that
|
|
|
(i)
|
The act or
omission of the director was material to the matter giving rise to the
proceeding; and
|
|
|
(ii)
|
The director
actually received an improper personal benefit in money, property, or
services; or
|
|
|
(iii)
|
In the case
of any criminal proceeding, the director had reasonable cause to believe
that the act or omission was
unlawful.
|
|
|
2.
|
(i)
|
Indemnification
may be against judgments, penalties, fines, settlements, and reasonable
expenses actually incurred by the director in connection with the
proceeding.
|
|
|
(ii)
|
However, if
the proceeding was one by or in the right of the corporation,
indemnification may not be made in respect of any proceeding in which the
director shall have been adjudged to be liable to the
corporation.
|
|
(1)
Name and Principal
Business Address
|
(2)
Positions and Offices
with Underwriter
|
(3)
Positions and Offices
with Registrant
|
|
|
LAO
|
E. Grant
Abramson
|
Vice
President
|
None
|
|
LAO
|
David L.
Abzug
|
Vice
President
|
None
|
|
LAO
|
William C.
Anderson
|
Vice
President
|
None
|
|
LAO
|
Robert B.
Aprison
|
Senior Vice
President
|
None
|
|
LAO
|
T. Patrick
Bardsley
|
Regional Vice
President
|
None
|
|
LAO
|
Shakeel A.
Barkat
|
Vice
President
|
None
|
|
LAO
|
Thomas M.
Bartow
|
Senior Vice
President
|
None
|
|
IRV
|
Carl R.
Bauer
|
Vice
President
|
None
|
|
LAO
|
Michelle A.
Bergeron
|
Senior Vice
President
|
None
|
|
LAO
|
J. Walter
Best, Jr.
|
Senior Vice
President
|
None
|
|
LAO
|
Roger J.
Bianco, Jr.
|
Regional Vice
President
|
None
|
|
LAO
|
John A.
Blanchard
|
Senior Vice
President
|
None
|
|
LAO
|
Randall L.
Blanchetti
|
Regional Vice
President
|
None
|
|
LAO
|
Gerard M.
Bockstie, Jr.
|
Regional Vice
President
|
None
|
|
LAO
|
Jonathan W.
Botts
|
Regional Vice
President
|
None
|
|
LAO
|
Bill
Brady
|
Senior Vice
President
|
None
|
|
LAO
|
Mick L.
Brethower
|
Senior Vice
President
|
None
|
|
LAO
|
C. Alan
Brown
|
Vice
President
|
None
|
|
IRV
|
William H.
Bryan
|
Regional Vice
President
|
None
|
|
LAO
|
Sheryl M.
Burford
|
Assistant
Vice President
|
None
|
|
IRV
|
J. Peter
Burns
|
Vice
President
|
None
|
|
LAO
|
Steven
Calabria
|
Vice
President
|
None
|
|
LAO
|
Thomas E.
Callahan
|
Regional Vice
President
|
None
|
|
SNO
|
Kathleen D.
Campbell
|
Vice
President
|
None
|
|
LAO
|
Matthew C.
Carlisle
|
Vice
President
|
None
|
|
LAO
|
Jason S.
Carlough
|
Regional Vice
President
|
None
|
|
LAO
|
Damian F.
Carroll
|
Vice
President
|
None
|
|
LAO
|
James D.
Carter
|
Regional Vice
President
|
None
|
|
LAO
|
Brian C.
Casey
|
Senior Vice
President
|
None
|
|
LAO
|
Victor C.
Cassato
|
Senior Vice
President
|
None
|
|
LAO
|
Christopher
J. Cassin
|
Senior Vice
President
|
None
|
|
LAO
|
Denise M.
Cassin
|
Director,
Senior Vice President and Director of AFIG and Dealer
Relations
|
None
|
|
LAO
|
David D.
Charlton
|
Director,
Senior Vice President and Director Individual Investor and Advisory
Business
|
None
|
|
LAO
|
Thomas M.
Charon
|
Vice
President
|
None
|
|
LAO
|
Wellington
Choi
|
Vice
President
|
None
|
|
LAO
|
Paul A.
Cieslik
|
Vice
President
|
None
|
|
LAO
|
Kevin G.
Clifford
|
Director,
President and
Chief
Executive Officer
|
None
|
|
HRO
|
Cheri
Coleman
|
Vice
President
|
None
|
|
LAO
|
Ruth M.
Collier
|
Director,
Senior Vice President
|
None
|
|
SNO
|
David
Coolbaugh
|
Vice
President
|
None
|
|
LAO
|
Carlo O.
Cordasco
|
Regional Vice
President
|
None
|
|
LAO
|
Charles H.
Cote
|
Regional Vice
President
|
None
|
|
LAO
|
Thomas E.
Cournoyer
|
Vice
President
|
None
|
|
LAO
|
Michael D.
Cravotta
|
Assistant
Vice President
|
None
|
|
LAO
|
Joseph G.
Cronin
|
Vice
President
|
None
|
|
LAO
|
D. Erick
Crowdus
|
Regional Vice
President
|
None
|
|
LAO
|
Christopher
J. Curran
|
Regional Vice
President
|
None
|
|
LAO
|
William F.
Daugherty
|
Vice
President
|
None
|
|
LAO
|
Peter J.
Deavan
|
Regional Vice
President
|
None
|
|
LAO
|
Guy E.
Decker
|
Vice
President
|
None
|
|
LAO
|
Daniel J.
Delianedis
|
Senior Vice
President
|
None
|
|
LAO
|
James W.
DeLouise
|
Assistant
Vice President
|
None
|
|
LAO
|
Jeffrey C.
Denny
|
Regional Vice
President
|
None
|
|
James A.
DePerno, Jr.
570
Porterville Road
East Aurora,
NY 14052
|
Senior Vice
President
|
None
|
|
|
LAO
|
Bruce L.
DePriester
|
Director,
Senior Vice
President,
Treasurer and
Controller
|
None
|
|
LAO
|
Lori A.
Deuberry
|
Regional Vice
President
|
None
|
|
LAO
|
Dianne M.
Dexter
|
Assistant
Vice President
|
None
|
|
LAO
|
Thomas J.
Dickson
|
Vice
President
|
None
|
|
LAO
|
Michael A.
DiLella
|
Senior Vice
President
|
None
|
|
NYO
|
Dean M.
Dolan
|
Vice
President
|
None
|
|
LAO
|
Hedy B.
Donahue
|
Assistant
Vice President
|
None
|
|
LAO
|
Michael J.
Downer
|
Director
|
None
|
|
LAO
|
Craig A.
Duglin
|
Regional Vice
President
|
None
|
|
LAO
|
Michael J.
Dullaghan
|
Vice
President
|
None
|
|
IND
|
Lloyd G.
Edwards
|
Senior Vice
President
|
None
|
|
LAO
|
Timothy L.
Ellis
|
Senior Vice
President
|
None
|
|
LAO
|
Kristopher A.
Feldmeyer
|
Regional Vice
President
|
None
|
|
LAO
|
Lorna
Fitzgerald
|
Vice
President
|
None
|
|
LAO
|
William F.
Flannery
|
Vice
President
|
None
|
|
LAO
|
John R.
Fodor
|
Director,
Executive Vice President
|
None
|
|
LAO
|
Charles L.
Freadhoff
|
Vice
President
|
None
|
|
LAO
|
Daniel B.
Frick
|
Vice
President
|
None
|
|
LAO
|
Linda S.
Gardner
|
Vice
President
|
None
|
|
LAO
|
Keith R.
George
|
Regional Vice
President
|
None
|
|
IRV
|
Lori A.
Giacomini
|
Assistant
Vice President
|
None
|
|
LAO
|
J.
Christopher Gies
|
Senior Vice
President
|
None
|
|
LAO
|
David M.
Givner
|
Secretary
|
None
|
|
LAO
|
Jack E.
Goldin
|
Regional Vice
President
|
None
|
|
LAO
|
Earl C.
Gottschalk
|
Vice
President
|
None
|
|
LAO
|
Jeffrey J.
Greiner
|
Director,
Senior Vice President
|
None
|
|
LAO
|
Eric M.
Grey
|
Vice
President
|
None
|
|
NYO
|
Maura S.
Griffin
|
Assistant
Vice President
|
None
|
|
IRV
|
Steven
Guida
|
Director,
Senior Vice President
|
None
|
|
IRV
|
Mariellen
Hamann
|
Vice
President
|
None
|
|
LAO
|
Derek S.
Hansen
|
Vice
President
|
None
|
|
LAO
|
Calvin L.
Harrelson, III
|
Vice
President
|
None
|
|
LAO
|
Robert J.
Hartig, Jr.
|
Vice
President
|
None
|
|
LAO
|
Craig W.
Hartigan
|
Regional Vice
President
|
None
|
|
LAO
|
Linda M.
Hines
|
Vice
President
|
None
|
|
LAO
|
Steven J.
Hipsley
|
Regional Vice
President
|
None
|
|
LAO
|
Russell K.
Holliday
|
Vice
President
|
None
|
|
LAO
|
Heidi
Horwitz-Marcus
|
Regional Vice
President
|
None
|
|
LAO
|
Kevin B.
Hughes
|
Vice
President
|
None
|
|
LAO
|
Ronald R.
Hulsey
|
Senior Vice
President
|
None
|
|
LAO
|
Marc
Ialeggio
|
Vice
President
|
None
|
|
LAO
|
Robert S.
Irish
|
Senior Vice
President
|
None
|
|
HRO
|
Jill
Jackson-Chavis
|
Vice
President
|
None
|
|
IND
|
David K.
Jacocks
|
Assistant
Vice President
|
None
|
|
LAO
|
Linda
Johnson
|
Vice
President
|
None
|
|
GVO-1
|
Joanna F.
Jonsson
|
Director
|
None
|
|
IRV
|
Damien M.
Jordan
|
Senior Vice
President
|
None
|
|
LAO
|
Marc J.
Kaplan
|
Vice
President
|
None
|
|
LAO
|
John P.
Keating
|
Senior Vice
President
|
None
|
|
LAO
|
Brian G.
Kelly
|
Regional Vice
President
|
None
|
|
LAO
|
Ryan C.
Kidwell
|
Regional Vice
President
|
None
|
|
LAO
|
Andrew J.
Kilbride
|
Vice
President
|
None
|
|
LAO
|
Mark
Kistler
|
Regional Vice
President
|
None
|
|
NYO
|
Dorothy
Klock
|
Vice
President
|
None
|
|
LAO
|
Dianne L.
Koske
|
Vice
President
|
None
|
|
IRV
|
Elizabeth K.
Koster
|
Vice
President
|
None
|
|
LAO
|
Christopher
F. Lanzafame
|
Regional Vice
President
|
None
|
|
LAO
|
Patricia D.
Lathrop
|
Regional Vice
President
|
None
|
|
IRV
|
Laura
Lavery
|
Vice
President
|
None
|
|
R. Andrew
LeBlanc
78 Eton
Road
Garden City,
NY 11530
|
Vice
President
|
None
|
|
|
LAO
|
Clay M.
Leveritt
|
Regional Vice
President
|
None
|
|
LAO
|
Susan B.
Lewis
|
Assistant
Vice President
|
None
|
|
LAO
|
T. Blake
Liberty
|
Vice
President
|
None
|
|
LAO
|
Mark J.
Lien
|
Vice
President
|
None
|
|
LAO
|
Lorin E.
Liesy
|
Vice
President
|
None
|
|
LAO
|
Louis K.
Linquata
|
Vice
President
|
None
|
|
HRO
|
Maria M.
Lockard
|
Assistant
Vice President
|
None
|
|
LAO
|
William J.
Maguire
|
Regional Vice
President
|
None
|
|
Brendan T.
Mahoney
1 Union
Avenue, Suite One
Sudbury, MA
01776
|
Vice
President
|
None
|
|
|
LAO
|
Nathan G.
Mains
|
Regional Vice
President
|
None
|
|
Stephen A.
Malbasa
13405 Lake
Shore Blvd.
Cleveland,
OH 44110
|
Director,
Senior Vice President and Director of Retirement Plan
Business
|
None
|
|
|
LAO
|
Paul R.
Mayeda
|
Assistant
Vice President
|
None
|
|
LAO
|
Eleanor P.
Maynard
|
Vice
President
|
None
|
|
LAO
|
Christopher
McCarthy
|
Vice
President
|
None
|
|
LAO
|
James R.
McCrary
|
Vice
President
|
None
|
|
LAO
|
Joseph A.
McCreesh, III
|
Regional Vice
President
|
None
|
|
LAO
|
Will
McKenna
|
Vice
President
|
None
|
|
SNO
|
John V.
McLaughlin
|
Senior Vice
President
|
None
|
|
LAO
|
Scott M.
Meade
|
Senior Vice
President
|
None
|
|
LAO
|
Daniel P.
Melehan
|
Regional Vice
President
|
None
|
|
LAO
|
William T.
Mills
|
Regional Vice
President
|
None
|
|
LAO
|
James R.
Mitchell III
|
Regional Vice
President
|
None
|
|
LAO
|
Charles L.
Mitsakos
|
Regional Vice
President
|
None
|
|
LAO
|
Monty L.
Moncrief
|
Vice
President
|
None
|
|
LAO
|
David H.
Morrison
|
Regional Vice
President
|
None
|
|
LAO
|
Andrew J.
Moscardini
|
Vice
President
|
None
|
|
LAO
|
Brian D.
Munson
|
Regional Vice
President
|
None
|
|
LAO
|
Jack
Nitowitz
|
Assistant
Vice President
|
None
|
|
LAO
|
William E.
Noe
|
Senior Vice
President
|
None
|
|
LAO
|
Jonathan H.
O’Flynn
|
Regional Vice
President
|
None
|
|
LAO
|
Eric P.
Olson
|
Senior Vice
President
|
None
|
|
LAO
|
Jeffrey A.
Olson
|
Vice
President
|
None
|
|
LAO
|
Thomas A.
O’Neil
|
Regional Vice
President
|
None
|
|
LAO
|
Shawn M.
O’Sullivan
|
Regional Vice
President
|
None
|
|
LAO
|
Michael W.
Pak
|
Regional Vice
President
|
None
|
|
LAO
|
W. Burke
Patterson, Jr.
|
Vice
President
|
None
|
|
LAO
|
Gary A.
Peace
|
Senior Vice
President
|
None
|
|
LAO
|
Samuel W.
Perry
|
Vice
President
|
None
|
|
LAO
|
Raleigh G.
Peters
|
Regional Vice
President
|
None
|
|
LAO
|
David K.
Petzke
|
Senior Vice
President
|
None
|
|
IRV
|
John H.
Phelan, Jr.
|
Director
|
None
|
|
LAO
|
Fredric
Phillips
|
Senior Vice
President
|
None
|
|
LAO
|
John
Pinto
|
Vice
President
|
None
|
|
LAO
|
Carl S.
Platou
|
Senior Vice
President
|
None
|
|
LAO
|
Charles R.
Porcher
|
Regional Vice
President
|
None
|
|
LAO
|
Julie K.
Prather
|
Vice
President
|
None
|
|
SNO
|
Richard P.
Prior
|
Vice
President
|
None
|
|
LAO
|
Steven J.
Quagrello
|
Regional Vice
President
|
None
|
|
LAO
|
Mike
Quinn
|
Vice
President
|
None
|
|
LAO
|
John W.
Rankin
|
Regional Vice
President
|
None
|
|
LAO
|
Jennifer D.
Rasner
|
Regional Vice
President
|
None
|
|
LAO
|
James P.
Rayburn
|
Regional Vice
President
|
None
|
|
LAO
|
Rene M.
Reincke
|
Vice
President
|
None
|
|
LAO
|
Mark S.
Reischmann
|
Regional Vice
President
|
None
|
|
LAO
|
Steven J.
Reitman
|
Senior Vice
President
|
None
|
|
LAO
|
Brian A.
Roberts
|
Vice
President
|
None
|
|
LAO
|
Jeffrey
Robinson
|
Regional Vice
President
|
None
|
|
LAO
|
Suzette M.
Rothberg
|
Regional Vice
President
|
None
|
|
LAO
|
James F.
Rothenberg
|
Non-Executive
Chairman and Director
|
Vice
Chairman
|
|
LAO
|
Romolo D.
Rottura
|
Vice
President
|
None
|
|
LAO
|
Douglas F.
Rowe
|
Senior Vice
President
|
None
|
|
LAO
|
William M.
Ryan
|
Regional Vice
President
|
None
|
|
LAO
|
Dean B.
Rydquist
|
Director,
Senior Vice
President,
Chief
Compliance Officer
|
None
|
|
LAO
|
Richard A.
Sabec, Jr.
|
Vice
President
|
None
|
|
LAO
|
Richard R.
Samson
|
Senior Vice
President
|
None
|
|
HRO
|
Diane
Sawyer
|
Senior Vice
President
|
None
|
|
LAO
|
Joseph D.
Scarpitti
|
Senior Vice
President
|
None
|
|
LAO
|
Kim D.
Schmidt
|
Assistant
Vice President
|
None
|
|
LAO
|
Shane D.
Schofield
|
Vice
President
|
None
|
|
LAO
|
David L.
Schroeder
|
Assistant
Vice President
|
None
|
|
LAO
|
Mark A.
Seaman
|
Vice
President
|
None
|
|
SNO
|
Sherrie L.
Senft
|
Vice
President
|
None
|
|
LAO
|
James J.
Sewell III
|
Regional Vice
President
|
None
|
|
LAO
|
Arthur M.
Sgroi
|
Vice
President
|
None
|
|
LAO
|
Steven D.
Shackelford
|
Regional Vice
President
|
None
|
|
LAO
|
R. Michael
Shanahan
|
Director
|
None
|
|
LAO
|
Michael J.
Sheldon
|
Vice
President
|
None
|
|
LAO
|
Frederic J.
Shipp
|
Regional Vice
President
|
None
|
|
LAO
|
Daniel S.
Shore
|
Vice
President
|
None
|
|
LAO
|
Brad
Short
|
Vice
President
|
None
|
|
LAO
|
Nathan W.
Simmons
|
Regional Vice
President
|
None
|
|
LAO
|
William P.
Simon, Jr.
|
Director,
Senior Vice President
|
None
|
|
LAO
|
Connie F.
Sjursen
|
Vice
President
|
None
|
|
LAO
|
Jerry L.
Slater
|
Senior Vice
President
|
None
|
|
LAO-W
|
John H.
Smet
|
Director
|
None
|
|
LAO
|
Rodney G.
Smith
|
Senior Vice
President
|
None
|
|
SNO
|
Stacy D.
Smolka
|
Assistant
Vice President
|
None
|
|
LAO
|
J. Eric
Snively
|
Regional Vice
President
|
None
|
|
LAO
|
Anthony L.
Soave
|
Vice
President
|
None
|
|
LAO
|
Therese L.
Soullier
|
Vice
President
|
None
|
|
LAO
|
Nicholas D.
Spadaccini
|
Senior Vice
President
|
None
|
|
LAO
|
Kristen J.
Spazafumo
|
Vice
President
|
None
|
|
LAO
|
Mark D.
Steburg
|
Vice
President
|
None
|
|
LAO
|
Michael P.
Stern
|
Regional Vice
President
|
None
|
|
LAO
|
Brad
Stillwagon
|
Vice
President
|
None
|
|
LAO
|
Thomas A.
Stout
|
Vice
President
|
None
|
|
LAO
|
Craig R.
Strauser
|
Senior Vice
President
|
None
|
|
LAO
|
Libby J.
Syth
|
Vice
President
|
None
|
|
LAO
|
Drew W.
Taylor
|
Vice
President
|
None
|
|
LAO
|
Larry I.
Thatt
|
Assistant
Vice President
|
None
|
|
LAO
|
Gary J.
Thoma
|
Vice
President
|
None
|
|
LAO
|
Cynthia M.
Thompson
|
Vice
President
|
None
|
|
LAO
|
David R.
Therrien
|
Assistant
Vice President
|
None
|
|
LAO
|
Mark R.
Threlfall
|
Regional Vice
President
|
None
|
|
LAO
|
David
Tippets
|
Regional Vice
President
|
None
|
|
IND
|
James P.
Toomey
|
Vice
President
|
None
|
|
LAO
|
Luke N.
Trammel
|
Regional Vice
President
|
None
|
|
IND
|
Christopher
E. Trede
|
Vice
President
|
None
|
|
LAO
|
Scott W.
Ursin-Smith
|
Director,
Senior Vice President
|
None
|
|
SNO
|
Cindy
Vaquiax
|
Vice
President
|
None
|
|
LAO
|
Srinkanth
Vemuri
|
Regional Vice
President
|
None
|
|
LAO
|
J. David
Viale
|
Senior Vice
President
|
None
|
|
DCO
|
Bradley J.
Vogt
|
Director
|
None
|
|
LAO
|
Sherrie S.
Walling
|
Assistant
Vice President
|
None
|
|
SNO
|
Chris L.
Wammack
|
Assistant
Vice President
|
None
|
|
LAO
|
Thomas E.
Warren
|
Senior Vice
President
|
None
|
|
LAO
|
Gregory J.
Weimer
|
Senior Vice
President
|
None
|
|
SFO
|
Gregory W.
Wendt
|
Director
|
None
|
|
LAO
|
George J.
Wenzel
|
Vice
President
|
None
|
|
LAO
|
Jason M.
Weybrecht
|
Regional Vice
President
|
None
|
|
LAO
|
Brian E.
Whalen
|
Vice
President
|
None
|
|
LAO
|
William C.
Whittington
|
Regional Vice
President
|
None
|
|
LAO
|
N. Dexter
Williams, Jr.
|
Senior Vice
President
|
None
|
|
LAO
|
Alan J.
Wilson
|
Director
|
None
|
|
LAO
|
Andrew L.
Wilson
|
Vice
President
|
None
|
|
LAO
|
Steven C.
Wilson
|
Regional Vice
President
|
None
|
|
LAO
|
Timothy J.
Wilson
|
Director,
Senior Vice President
|
None
|
|
LAO
|
Kurt A.
Wuestenberg
|
Vice
President
|
None
|
|
William R.
Yost
9463 Olympia
Drive
Eden Prairie,
MN 55347
|
Senior Vice
President
|
None
|
|
|
LAO
|
Jason P.
Young
|
Vice
President
|
None
|
|
LAO
|
Jonathan A.
Young
|
Regional Vice
President
|
None
|
|
LAO
|
Scott D.
Zambon
|
Regional Vice
President
|
None
|
|
DCO
|
Business
Address, 3000 K Street N.W., Suite 230, Washington, DC
20007-5140
|
|
GVO-1
|
Business
Address, 3 Place des Bergues, 1201 Geneva, Switzerland
|
|
HRO
|
Business
Address, 5300 Robin Hood Road, Norfolk, VA 23513
|
|
IND
|
Business
Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN
46240
|
|
IRV
|
Business
Address, 6455 Irvine Center Drive, Irvine, CA 92618
|
|
LAO
|
Business
Address, 333 South Hope Street, Los Angeles,
CA 90071
|
|
LAO-W
|
Business
Address, 11100 Santa Monica Blvd., 15th Floor, Los Angeles,
CA 90025
|
|
NYO
|
Business
Address, 630 Fifth Avenue, 36th
Floor, New York, NY 10111
|
|
SFO
|
Business
Address, One Market, Steuart Tower, Suite 1800, San Francisco, CA
94105
|
|
SNO
|
Business
Address, 3500 Wiseman Boulevard, San Antonio,
TX 78251
|
|
Item
28.
|
Location
of Accounts and Records
|
|
Item
29.
|
Management
Services
|
|
Item
30.
|
Undertakings
|
|
Signature
|
Title
|
||
|
(1)
|
Principal
Executive Officer:
|
||
|
/s/ Paul G. Haaga,
Jr.
|
Executive
Vice President
|
||
|
(Paul G.
Haaga, Jr.)
|
|||
|
(2)
|
Principal
Financial Officer and Principal Accounting Officer:
|
||
|
/s/ Jeffrey P.
Regal
|
Treasurer
|
||
|
(Jeffrey P.
Regal)
|
|||
|
(3)
|
Directors:
|
||
|
Ronald P.
Badie*
|
Director
|
||
|
Joseph C.
Berenato*
|
Director
|
||
|
Louise H.
Bryson*
|
Director
|
||
|
Robert J.
Denison*
|
Director
|
||
|
Robert A.
Fox*
|
Director
|
||
|
Leonade D.
Jones*
|
Director
|
||
|
John G.
McDonald*
|
Director
|
||
|
Gail L.
Neale*
|
Director
|
||
|
/s/ Dina N. Perry
|
President and
Director
|
||
|
(Dina N.
Perry)
|
|||
|
Henry E.
Riggs*
|
Chairman of
the Board (Independent and Non-Executive)
|
||
|
/s/ James F. Rothenberg
|
Vice
Chairman
|
||
|
(James F.
Rothenberg)
|
|||
|
Patricia K.
Woolf*
|
Director
|
||
|
/s/ Patrick F.
Quan
|
|||
|
(Patrick F.
Quan, Attorney-in-Fact, Powers of Attorney enclosed)
|
|||
|
Vincent P.
Corti
Chad L.
Norton
Patrick F.
Quan
Kimberly S.
Verdick
Steven I.
Koszalka
Tanya
Schneider
Courtney R.
Taylor
|
Dori
Laskin
Jeffrey P.
Regal
|
|
Vincent P.
Corti
Chad L.
Norton
Patrick F.
Quan
Kimberly S.
Verdick
Steven I.
Koszalka
Tanya
Schneider
Courtney R.
Taylor
|
David A.
Pritchett
Jeffrey P.
Regal
|
|
Vincent P.
Corti
Chad L.
Norton
Patrick F.
Quan
Kimberly S.
Verdick
Steven I.
Koszalka
Tanya
Schneider
Courtney R.
Taylor
|
Jeffrey P.
Regal
Carmelo
Spinella
|
|
Vincent P.
Corti
Chad L.
Norton
Patrick F.
Quan
Kimberly S.
Verdick
Steven I.
Koszalka
Tanya
Schneider
Courtney R.
Taylor
|
Dori
Laskin
Jeffrey P.
Regal
|
|
Vincent P.
Corti
Chad L.
Norton
Patrick F.
Quan
Kimberly S.
Verdick
Steven I.
Koszalka
Tanya
Schneider
Courtney R.
Taylor
|
Jennifer M.
Buchheim
Bryan K.
Nielsen
Jeffrey P.
Regal
|
|
Vincent P.
Corti
Chad L.
Norton
Patrick F.
Quan
Kimberly S.
Verdick
Steven I.
Koszalka
Tanya
Schneider
Courtney R.
Taylor
|
Jennifer M.
Buchheim
David A.
Pritchett
Jeffrey P.
Regal
|
|
Vincent P.
Corti
Chad L.
Norton
Patrick F.
Quan
Kimberly S.
Verdick
Steven I.
Koszalka
Tanya
Schneider
Courtney R.
Taylor
|
Jennifer M.
Buchheim
Bryan K.
Nielsen
Jeffrey P.
Regal
Carmelo
Spinella
|
|
Vincent P.
Corti
Chad L.
Norton
Patrick F.
Quan
Kimberly S.
Verdick
Steven I.
Koszalka
Tanya
Schneider
Courtney R.
Taylor
|
Jeffrey P.
Regal
|
|
Vincent P.
Corti
Chad L.
Norton
Patrick F.
Quan
Kimberly S.
Verdick
Steven I.
Koszalka
Tanya
Schneider
Courtney R.
Taylor
|
Jennifer M.
Buchheim
Jeffrey P.
Regal
|
|
Vincent P.
Corti
Chad L.
Norton
Patrick F.
Quan
Kimberly S.
Verdick
Steven I.
Koszalka
Tanya
Schneider
Courtney R.
Taylor
|
Jennifer M.
Buchheim
David A.
Pritchett
Jeffrey P.
Regal
|